363 


I 


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Of  THE  . 

UHlVERSnV  OF  lLLtHO»S. 

AN  EXAMINATION  AND  ANALYSIS 


OF  THE 

Postmaster -Generars    Proposals 
Concerning  Railway  Mail  Pay 


BEING  A  STUDY  OF  HOUSE  DOCUMENT  No. 
105,  SIXTY-SECOND  CONGRESS,  FIRST  SESSION, 
BASED  UPON  THE  ORIGINAL  DATA  SUPPLIED 
BY  THE  RAILWAYS  AND  USED  BY  THE  POST- 
MASTER-GENERAL AND  UPON  OFFICIAL 
STATISTICS.  ::  ::  :: 


PREPARED   UNDER   THE    SUPERVISION 


OF  THE 


Committee  on  Railway  Mail  Pay 


BY 


H.     T.     Newcomb 

Statistician 


Published  by  the 

COMMITTEE  ON  RAILWAY  MAIL  PAY 

1912 


COMMITTEE    ON  RAILWAY  MAIL  PAY 
/  

NOVEMBER,  1909. 

J.  KRUTTSCHNITT.  (Chairman), 

Vice-President  and   Director  of  Maintenance  and   Operation,   Union  and    Southern   Pacific 
Systems. 

LUCIUS  TUTTLE, 

President,  Boston  &  Maine  R.  R. 

RALPH  PETERS, 

President  and  General  Manager,  Long  Island  R.  R. 

C.  A.  WICKERSHAM. 

President  and  General  Manager,  Atlanta  &  West  Point  R.  R.  and  Western  Railway  of  Alabama. 

W.  W.  BALDWIN. 

Vice-President,  Chicago,  Burlington  &  Quincy  R.  R. 

W.  F.  ALLEN,  Secretary. 

DECEMBER,  1912. 

RALPH  PETERS,  (Chairman), 

President,  Long  Island  R.  R. 

C.  A.  WICKERSHAM. 

President  and  General  Manager.  Atlanta  &  West  Point  R.  R.  and  Western  Ry.  of  Alabama. 

W.  W.  BALDWIN, 

Vice-President,  Chicago,  Burlington  &  Quincy  R.  R. 

W.  W.  ATTERBURY, 

Vice-President,  Pennsylvania  R.  R. 

GEO.  T.  NICHOLSON, 

Vice-President.  Atchison,  Topeka  &  Santa  Fe  Ry. 

E.  J.  PEARSON, 

First  Vice-President,  Missouri  Pacific  Ry. 

E.  G.  BUCKLAND, 

Vice-President,  New  York,  New  Haven  &  Hartford  R.  R. 

C.  F.  DALY, 

Vice-President,  New  York  Central  Lines. 

W.  A.  WORTHINGTON. 

Assistant  Director  of  Maintenance  and  Operation,  Union  and  Southern  Pacific  Systems. 

W.  F.  ALLEN,  Secretary. 

SUB-COMMITTEE  OF  MAIL  EXPERTS. 

E.  T.  POSTLETHWAITE. 

Assistant  to  President,  Pennsylvania  R.  R. 

S.  C.  SCOTT, 

Assistant  to  the  First  Vice-President,  Pennsylvania  Lines  West  of  Pittsburgh. 

A.  H.  ROWAN, 

Assistant  to  the  Vice-President— Traffic  Department,  New  York  Central  Lines. 

H.  P.  THRALL. 

Mail  Traffic  Manager,  Union  Pacific  R.  R. 

J.  P.  LINDSAY, 

Manager  Mail  Traffic,  Santa  Fe  System. 

H.  E.  MACK, 

Manager  Mail  Traffic,  Missouri  Pacific  Ry. 

V.  J.  BRADLEY, 

General  Supervisor  Mail  Traffic,  Pennsylvania  R.  R. 

W.  W.  SAFFORD, 

General  Mail  and  Express  Agent,  Seaboard  Air  Line  Ry. 

H.  M.  WADE, 

Supervisor  of  Mails,  Erie  R.  R. 


3\ 


SL^ 


ANALYTICAL  TABLE  OF  CONTENTS 


PAGE 

Statement  relative  to  the  Modified  Edition  of  Document  No.  lO-j V 

Introduction    1 

I.     The  Postmaster-General's  Remnunendation  Briefly  Stated 2 

II.     Analysis  of  the  Postmaster-Geuerars  Report 7 

FIRST.  Data  submitted  by  the  railroads  at  the  request  of  the 
Post  Office  Department,  which  are  essential  to  a  complete 
understanding  of  the  subject,  have  been  withheld  and  sup- 
pressed. 

A.  Station   and   Terminal    Expenses   Directly    Incurred 

on  Accoimt  of  Mail 9 

\  B.     Personal    Transportation    16 

.   '  C.     Relative  Receipts  from  Passenger,  Express  and  Mail 

Traffic    18 

SECOND.      The   Postmaster-General   has    arbitrarily   transferred 
to  the  passenger  service  much  of  the  so-called  "dead"  space 
in  mail  cars,   although   this   space  could   not  be  utilized  as 
,  ''  passenger    space,    thus    improperly    increasing   the   apparent 

car-foot  miles  of  passenger  service,  and  correspondingly  de- 
creasing the  car-foot  miles  of  mail  service. 

jLc:7  A.  Car-foot  Mileage  Defined 19 

B.  Dead  Space  Defined 21 

C.  Relation  of  "Dead  Space"  to  cost  of  any  Service 23 

K  D.  What  the  Postmaster-General  Did 23 

Q  E.  Further  Proof  of  Arbitrary  Treatment  of  Space 28 

F.     The  Effect  of  these  Arbitrary  Methods 32 

=K^  G.     Conclusion  Necessary  from  these  Facts 33 

•^     THIRD.     The  Postmaster-General  apportioned  expenses  incurred 

^=^  for  the  joint  purposes  of  the  passenger  and  freight  services 

I  between  these  services,  in  accordance  with  a  method  which 

3  understates  the  cost  of  the  passenger  train  services  but  even 
P^  this  method  shows  that  the  mail  service  is  underpaid .33 

_,    FOURTH.     The  Postmaster-General   has  wholly  overlooked  the 
tr  fact  that  a  large  part  of  the  cost  incurred  by  the  railways 

."'^  ■  in  carrying  the  mails,  consists  of  interest  on  the  capital  they 

l^  employ.    By  ignoring  all  capital  expenses,  confining  his  atten- 

tion to  mere  operating  costs,  and  proposing  to  return  to  the 
railways  only  the  amount  of  these  operating  costs,  plus  six 
per  cent.,  he  urges  a  method  which,  if  applied  generally  to 

III 


all    their    business,    woiild    render    every    railroad    at    once 
bankrupt. 

A.  Postmaster-General  Admits  that  Some  Items  of  Ex- 

pense were  Omitted 35 

B.  The  Postmaster-General  Ignores  the  Fact  after  his 

Admission    35 

C.  The  Factors  in  Cost  of  Production 37 

D.  Railway  Investors  are  Constitutionally  Protected  in 

the  Right  to  Reasonable  Interest 38 

E.  Amounts   of   Expenses   Ignored   by   the   Postmaster- 

General    40 

F.  Even  on  the  Basis  of  the  Unfairly  Low  Estimates 

of  Operating  Costs  Made  by  the  Postmaster-Gen- 
eral. Allowance  for  the  Omitted  Expenses  Would 
Make  the  Mail  Pay  Higher  than  it  is  now 42 

I 

FIFTH.  In  confining  his  investigation  to  the  month  of  Novem- 
ber, the  Postmaster-General  selected  a  month  that  is  not  a 
fair  average  or  typical  portion  of  the  year  but,  in  connection 
with  the  methods  he  employed,  reduced  the  apparent  cost  of 
the  passenger  train  services,  resulting  from  his  calculations.  43 

III.  Recent  Reductions  in  Railway  Mail  Pay. 

A.  Preliminary  Survey  and  Comparisons 50 

B.  Reductions  Due  to  Natural  Operation  of  the  Law  of  1S73...  58 

C.  Effect  of  Competition  stimulated  by  Post  Office  Department.  60 

D.  Reductions  Made  by  the  Act  of  March  2.  1907 61 

E.  Reduction  by  Administrative  Order 62 

F.  Withdrawal  of  Payments  for  Special  Facilities 64 

G.  Withdrawal  of  Envelopes.  Postal  Cards  and  Mail  Equipment 

from   ^Nlails 65 

H.     Forwarding  Periodicals  by  Freight 65 

I.      Summary   of  Recent   Reductions 66 

J.      Conclusion  Drawn  from  These  Reductions 72 

IV.  Reduced  Railway  Mail  Pay  is  Now  Below  the  Level  of  Just  Com- 

pensation. 

A.  Points  Already  Demonstrated  in  this  Rejwrt 73 

B.  Railway   Mail   Pay  not   Excessive   before  Recent    Series   of 

Reductions    Began    74 

C.  Changed    Conditions    since    1901    Would    Justify     Increased 

Rather  than  Reduced  Railway  Mail   Pay 75 

D.  The  Passenger  Train   Services  are  not   Reasonably   Remun- 

erative    77 

E.  Railway    Gross    Receipts    from    Mail    Transportation    Lower 

than  from  any  other  Passenger  Train  Services. 80 

F.  Railways  should  be  paid  for  Apartment  Cars 82 

G.  The  Weight  Basis  of  Railway   Mail   Pay    Should   be  Ascer- 

tained Annually    84 

H.     Terminal   Services  on  Light  Routes  Should  be  Paid  For 85 

V.     Conclusion    85 

Appendix   A    Sga 

IV 


THE  MODIFIED  EDITION  OF  DOCUMENT  NO.  105. 

There  are  now  extant  two  editions  of  Document  No.  105.  All  the 
figures  in  tlie  pamphlet  to  which  these  pages  are  annexed  are  from 
the  first  and  all  references  are  to  the  same  edition.  The  second  or  modi- 
fied edition,  published  since  this  pamphlet  was  put  in  type,  changes 
many  of  the  figures  in  the  original  edition;  hut  contains  no  reference 
to  the  fact  that  it  is  a  second  edition  or  any  intimation  that  any  of 
the  data  have  been  modified.  It  is  known,  however,  that  the  modifica- 
tions were  made  necessary  by  attention  which  had  been  directed  to 
numerous  and  serious  errors  in  the  first  edition. 

The  appearance  and  paging  of  both  editions  are  identical  and  the 
only  way  to  distinguish  one  from  the  other,  except  by  comparing  the 
figures,  is  to  note  that,  on  the  unnumbered  page  opposite  the  table  of 
contents,  the  first  edition  contains  the  seal  of  the  Government  Print- 
ing Office,  while  in  the  second  edition  the  corresiaonding  space  is  occu- 
pied by  a  copy  of  the  resolution  of  the  House  of  Representatives  of 
March  26,  1912,  authorizing  the  printing  of  two  thousand  copies  for 
the  use  of  the  House  Committee  on  Post  Offices  and  Post  Roads. 

In  order  to  avoid  confusion,  on  account  of  the  dissimilar  figures 
in  these  publications  which  bear  the  same  title  and  an  appearance  of 
identity,  it  is  necessary  to  call  attention  to  some  of  the  more  important 
changes  and  to  their  effect  upon  the  calculations  in  the  annexed 
pamphlet. 

As  fully  demonstrated  in  this  pamphlet,  the  controlling  figure  in 
the  Postmaster-General's  calculations  is  that  representing  the  percentage 
of  the  total  car-foot  mileage  of  passenger  trains  which  he  credited  to 
the  mail  service.  In  the  first  edition  this  was  stated  as  7.16  per  cent 
(Document  No.  105,  page  59)  ;  in  the  same  place  in  the  modified 
edition  7.18  per  cent  appears.  Other  changes  on  page  59  of  Docu- 
ment No.  105  are  as  follows: 


Car-foot  mileage 

Service 

First  edition 

Second  edition                     Increase 

Mail     

926.164.458.83 

1.379,315.759.65 

10,634.749.746.71 

9.32.371.285.37 

1.379.396.873.05 

10.676,112.464.36 

6.206.826.54 

81.113.40 

41,362.717.65 

Express    

Passengers    

Total    

12,940,229,965.19 

12,987,880.022.78 

47,650,657.59 

Examining  the  details  of  the  table  the  totals  of  which  were  changed 
as  above  indicated  (Table  3,  pages  38-59)  it  is  found  tlmt  the  changes 
relate  to  but  two  systems  and  that  the  addition  of  6,206,826.54  to 
car-foot  mileage  made  in  the  mail  service  is  the  sum  of  500,749.20  car- 
foot  miles  added  to  the  Atchison,  Topeka  &  Santa  Fe  System  (Docu- 
ment N^o.  105,  page  39)  and  of  5,706,0TT.34  miles  added  to  the  Penn- 
sylvania System  (Document  Xo.  105,  pages  51-3).  The  latter  item  in- 
cludes additions  to  the  car-foot  mileage  of  four  of  the  lines  of  the  sys- 
tem, as  follows:  Pennsylvania  Company,  1,075,046.85;  Philadelphia, 
Baltimore  &  Washington,  58,512.60;  Pittsburgh,  Cincinnati,  Chicago  & 
St.  Louis,  3,170,586.08;  Yandalia,  1,401,931.81. 

The  following  changes,  among  others,  appear  in  the  totals  of 
Table  7 '(Document  Xo.  105,  pp.  280-281)  . 


Expenses  for  November, 
1909 

First               I             Second 
Edition                        Edition 

Increase 

Taxes    

$7,198,452.91    i    $7,206,270.16    1    $7,817.25 

Operating     expenses     charged     to 
mail  service 

2.676.50.'5.75          2.682.707.92 

6,294.17 

A  further  scrutiny  of  this  table  (Document  Xo.  105,  pp.  272- 
281)  shows  that  the  addition  in  taxes  was  to  the  amount  stated  for 
the  Louisville  &  Xashville  Railroad  (page  274)  and  that  the  changes 
in  the  expenses  assigned  to  the  mail  service  included  the  efEect  of  this 
addition  and  of  the  changes  in  the  car-foot  mileage  of  the  Atchison, 
Topeka  &  Santa  Fe  (page  272)  and  of  the  various  companies  of  the 
Pennsylvania  System  (page  276). 

Whoever  wishes  to  check  all  the  changes  made  by  the  new  edition 
will  be  able  to  do  so  by  referring  to  the  pages  indicated  below: 


Changes  affecting 

Atchison,  Topeka  &  Santa  Fe 

Louisville  &   Nashville 

Pennsylvania    Compan.v    

Pennsylvania  Railroad   

Philadelphia,    Baltimore   &    Washington 

Pittsburgh,  Cincinnati.  Chicago  <&  St.  Louis. 

Vandalia    

Totals  and  averages 


Pages— Both  editions 


38,  39.  60,  177,  263.  272  ,273 
274,  275 

50,  51,  63, 191,  260,  261,  276,  277 
191,  259.  276,  277 
52,  53,  63,  191,  259,  276,  277 
52.  53,  63, 191, 193,  261,  276,  277 
52.  53,  63.  193.  263,  276,  277 
58.  59,  65, 196,  197,  266,  267, 
269.  270,  280,  281 


The  fact  that  the  important  changes  which  have  thus  necessitated 
a  revision  of  Document  Xo.  105  relate  to  only  three  systems  suggests 
that  an  equally  careful  checking  of  the  data  reported  for  all  other  sys- 
tems would  require  still  more  numerous  and  radical  modifications  in 
the  Postmaster-General's  figures.  This  is  especially  evident  when  it 
is  understood  that  the  changes  so  far  made  have  been  in  recognition 


VI 


of  errors  brought  to  the  attention  of  the  Post  Office  Department  by 
the  railways  directly  affected — few  railways  have  attempted  the  arduous 
task  of  examining  the  long  and  complicated  computations  of  the  De- 
partment in  order  to  detect  specific  errors. 

As  already  noted,  the  figures  and  quotations  from  Document  No. 
105,  in  this  pamphlet  are  from  the  first  edition.  Some  changes  would 
be  necessary  in  order  to  substitute  the  figures  of  the  new  edition  and 
the  result  would  not  be  wholly  satisfactory  as  both  editions  are  in 
circulation  and,  there  being  no  plainly  distinguishing  mark  on  either, 
whoever  uses  a  copy  of  either  is  likely  to  regard  it  as  the  authoritative 
and  definitive  issue.  The  following  table  indicates  the  more  important 
changes  that  would  be  necessary  to  base  the  annexed  pamphlet  upon  the 
second,  instead  of  the  first,  edition  of  Document  No.  105 : 


To  agree  with  the 

Line  (if  in 

Column  (if 

Instead 

second  edition  of 

Page 

text) 

in  table) 

of 

Document  No.  105, 
there  should  be: 

9 

10.13 

$2,676,503.75 

$2,682,797.92 

9 

13-14 

$2,837,093.98 

$2,g43,765.80 

9 

14,19 

21.36 

21.18 

20 

3 

$2,676,503.75 

$2,682,797.92 

20 

6 

14.99 

14.95 

'29 

2 

10,634,749,747 

10,676,112,464 

29 

2 

1,.379,315,759 

1,-379,396,873 

29 

2 

926,164,459 

932,371,285 

29 

2 

12,940,229,965 

12,987,880,622 

29 

3 

82.18 

82.20 

29 

.... 

3 

10.66 

10.62 

29 



3 

7.16 

7.18 

29 

6 

732,379,597 

773,742,314 

29 

6 

59,207,170 

59,288,284 

29 

6 

564,640,981 

612,291,638 

29 

1 

6.89 

7.25 

29 

7 

4.29 

4..30 

29 

7 

4.36 

4.71 

29 

8 

226,945,786 

220,7.38,960 

29 

9 

24.50 

23.67 

30 

2 

54.544 

54,755 

30 

2 

7,074 

7.075 

30 

2 

4,750 

4.782 

30 

2 

66,368 

66,612 

30 

4 

866 

655 

30 

4 

313 

312 

30 

4 

1,703 

1,671 

30 

4 

2,882 

2,638 

30 

5 

1.59 

1.20 

30 



5 

4.42 

4.41 

30 

8,21 

5 

35.85 

34.94 

30 

5 

4.34 

3.96 

31 

3 

5.50,727,960 

585,923,233 

31 

3 

14,966,609 

15,317,133 

31 

3 

565.694,569 

601,240,367 

31 

3 

17.494,235 

17.994.984 

31 

3 

3.5,261,514 

35,762.263 

31 
31 

3 

681,670,711 

717,717,258 

6 

15.789,764 

15.289,015 

VII 


To  agree  witii  the 

Tjin**  (if  in 

Column  (if                       Instead 

second  edition  of 

Page 

text 

in  table)                               of 

Document  No.  105, 

there  should  be: 

31 

6                           20,223,126 

19,722,367 

31 

6                             46.011,932 

9.965.385 

31 

7                             47.44 

45.04 

31 

7                           36.45 

35.55 

31 

7                             6.32 

1..37 

31 

9                           80.79 

81.64 

31 

9                             2.20 

2.13 

31 

9                           82.99 

83.77 

31 

9                           11.84 

11.25 

31 

9                             5.17 

4.98 

32 

"12 

210.326,652 

204.679.088 

32 

13 

21.28 

20.71 

32  A 

3                     23,288.845.22 

24.363,892.07 

32  A     , 

3                      24.054.604.27 

27.225,190.35 

32  A 

3                      10,908.799.55 

12..310,731.36 

32  A         i 

3                   778.197,633.71 

783.845,198.45 

32  A 

4                        5.458.291.78 

4,383.244.93 

32  A 

4                        8.328,919.73 

5,158.333.65 

32  A 

4                        3.918,612.45 

2.516.680.64 

32  A 

4                    210.326.652.31 

204.679.087.57 

32  A 

5                            18.99 

15.25 

32  A 

5                           25.72 

15.93 

32  A 

5                           26.43 

16.97 

32  A 

5                           21.28 

20.71 

36                       1 

>4.'33 

$97,186.52 

$93,614.87 

36                 29. ; 

JO.  31 

5.17 

4.08 

36 

36 

$62,380.54 

$65,952.19 

38 

30 

$2,673,503.75 

$2,682,797.92 

38 

33 

$3,878,431.75 

$3,887,725.92 

47 

2.18 

$2,676,503.75 

$2,682,797.02 

47 

19 

$1,189,705.92 

$1,192,503.67 

47 

19 

$3,866,209.67 

$3,875,301.59 

47 

19 

$258,436.54 

$267,528.46 

47 

20 

$3,101,238.48 

$3,210..341.52 

80 

2                             7.16 

7.18 

80                16.: 

25.' 27 

2                                  $7.16 

$7.18 

81 

8 

0.76 

0.78 

81 

8 

$5,812,277.49 

$5,965,232.16 

83 

2                    430  944  968  10 

431  210  671  03 

83 

2                    864  633  119.64 

7XU  J.»A«A\_'»'_'   1    -K  t\'*f 

364,370.259.64 
795  580  930  67 

83 

2                     795  578  087  74 

83 

11.16 

84.61 

84.50 

83 

17 

$4,008,643.06 

$4,003,431.49 

VIII 


AN  EXAMINATION  AND  ANALYSIS 

OF   THE 

Postmaster-General's  Proposals  Concerning  Railway  Mail  Pat 


INTRODUCTION. 

This  examination  and  analysis  of  the  recommendation  and  argu- 
ment concerning  railway  mail  pay  made  by  the  Postmaster-General  and 
printed  as  Document  No.  105  of  the  Sixty-Second  Congress,  first  ses- 
sion, deals  with  a  proposal  to  reduce  the  annual  revenues  of  the  railways 
by  the  sum  of  $9,000,000.00,  which  (capitalized  at  five  per  cent)  would 
equal  a  reduction  of  $180,000,000  in  the  value  of  their  property.  This 
reduction  the  Postmaster-General  proposes  to  accomplish  by  a  diminu- 
tion of  mail  pay  without  any  compensatory  reduction  in  the  services  and 
facilities  demanded  by  the  Post  Office  Department  and  in  a  manner  not 
enabling  railway  economies  in  any  degree  offsetting  the  loss  of  gross 
receipts. 

The  extent  and  nature  of  this  proposed  reduction  and  the  exceed- 
ingly large  number  of  errors  and  omissions  in  Document  No.  105  to 
which  it  will  be  necessary  to  call  attention  are  deemed  fully  to  warrant 
the  length  of  the  paper. 

Especial  attention  is  invited  to  the  following  errors  which,  among 
others,  are  found  in  Document  No.  105  : 

First.  All  the  Postmaster-General's  calculations  and  conclu- 
sions rest  upon  data  for  the  single  month  of  November,  1909, 
a  month  in  which  passenger  traffic  and  expenses  were  relatively 
very  light  and  freight  traffic  and  expenses  were  relatively  very 
heavy.     (See  pages,  43-50.) 

Second.  The  Postmaster-General  wholly  ignored  the  neces- 
sity (industrial  as  well  as  Constitutional)  of  a  reasonable  return 
upon  railway  investments,  equitably  proportioned  to  the  fair 
value  of  railway  property,  and  that  this  is  an  inevitable  part  of 
the  cost  of  railway  transportation,   confining  his   attention  to 


operating  expenses  and  taxes  which  make  up  only  a  part  of  the 
real  cost.     (See  pages  35-43.) 

Third.  The  Postmaster-General  apportioned  joint  expenses 
between  the  passenger  and  freight  services  in  accordance  with  a 
method  that  does  not  give  the  full,  real  cost  of  the  passenger 
train  services.     (See  pages  33-35.) 

Fourth.  The  Postmaster-General  ignored  important  serv- 
ices and  facilities  rendered  and  supplied  by  the  railways,  such 
as  station  facilities  and  terminal  services  and  the  transportation 
of  postal  employees  not  accompanying  the  mails,  and  ignored 
the  actual  and  direct  expenditures  of  the  railways  for  these  pur- 
poses.    (See  pages  9-18.) 

Fifth,  The  Postmaster-General  misconceived  the  nature  of 
working  space  and  temporarily  unused  space  in  cars  carrying 
mail  and  not  only  refused  to  regard  such  space  as  required  by 
the  postal  service  but  actually  added  it  to  the  passenger  space. 
(See  pages  19-33.) 

All  the  foregoing  errors,  and  many  others,  demonstrated  and  dis- 
cussed in  the  following  pages,  had  the  effect,  separately  and  cumulatively, 
of  making  the  Postmaster-General's  estimates  of  the  cost  to  the  railways 
of  the  mail  services  and  facilities  they  supply  too  low. 


THE    POSTMASTER-GENERAL'S    RECOMMENDATION 

BRIEFLY  STATED. 

The  Postmaster-General's  letter  to  the  Speaker  of  the  House  of 
Representatives,  printed  under  date  of  August  13,  1911,  but  not 
received  by  the  representative  of  any  affected  railway  until  December 
8,  1911,  with  the  accompanying  reports  and  tabulations  contained  in 
House  Document  No.  105  of  the  first  session  of  the  Sixty-second  Con- 
gress, comprises: — 

First.  A  recommendation  for  a  revision  of  the  basis  of 
payment  for  the  railway  facilities  and  services  required  in  con- 
nection with  the  postal  service,  and, 

Second.     A  series  of  reports  and  tabulations  apparently  in- 
tended to  illustrate  the  results  which  would  follow  the  applica- 
._  tion  of  the  revised  basis  of  payment  that  is  recommended. 


The  system  of  railway  mail  pay  wliich  the  Postmaster-General 
thus  seeks  to  have  substituted  for  that  now  in  lorce  may,  perhaps, 
be  best  stated  by  means  of  quotations  from  the  "Tentative  Draft  of 
Proposed  Law  for  Eegulation  of  Railway  Mail  Pay"  Avhich  appears  on 
the  fourth  and  fifth  pages  of  Document  No.  105.  Thus  stated,  it  is 
proposed : 

First.  (As  to  railways  the  construction  of  which  was  not 
aided  hy  Congressional  grants  of  land)  "The  Postmaster- 
General  is  authorized  and  directed  to  readjust  the  pay  to  com- 
panies operating  railroads  for  the  transportation  and  handling 
of  the  mails  and  furnishing  facilities  in  connection  therewith, 
not  less  frequently  than  once  in  each  fiscal  year,  ...  at  a  rate 
of  comijensation  per  annum  not  exceeding  the  cost  to  the  railroad 
companies  of  carrying  the  mails  as  ascertained  by  him,  and  six 
per  centum  of  such  cost:  Provided,  That  when  such  ascer- 
tained cost  and  six  per  centum  does  not  equal  twenty-five  dollars 
per  mile  per  annum,  he  may,  in  his  discretion,  allow  not  exceed- 
ing such  rate,  and. 

Second.  [As  to  land-grant  railways)  "Railroad  com- 
panies whose  railroads  were  constructed  in  Avhole  or  in  part  by 
a  land  grant  made  by  Congress,  on  the  condition  that  the  mails 
should  be  transported  over  their  roads  at  such  price  as  Con- 
gress should  by  law  direct,  shall  receive  not  exceeding  the  cost 
to  them  of  performing  the  service." 

The  "tentative  draft"  contains  no  definition  of  the  manner  in 
which  the  cost  of  carrying  the  mails  would  be  or  could  be  ascertained 
nor  as  to  the  elements  of  cost  to  be  considered.  Much  less  does  it 
contain  any  language  suggesting  the  exclusion  from  consideration  of 
any  element  of  cost.  As,  upon  any  fair  and  reasonable  basis  of  ascer- 
tainment, the  cost  of  the  postal  facilities  and  services  supplied  by  the 
railways  exceeds  the  sums  now  paid  therefor  by  the  Government  they 
could  have  no  very  practical  objection  to  the  proposed  system  if  it  would, 
in  fact,  although  abandoning  the  proper  and  customary  standards  of 
compensation,  increase  their  mail  revenues  to  an  amount  really  in  ex- 
cess of  the  actual  cost.  But  it  is  necessary  to  interpret  the  Postmaster- 
General's  recommendations  in  the  liglit  of  tlie  whole  report  in  which 
they  are  contained  and  especially  in  the  light  of  the  following  claims 
which  he  makes. 

First.  That  the  investigation  reported  in  Document  No. 
105  discloses  the  real  cost  to  the  railways  of  carrying  the  mails, 
and, 


Second.     That  the  enactment  of  his  recommendations  would 
effect  a  reduction  of  $9,000,000.00  from  present  railway  mail 
pay- 
In  his  annual  report  to   Congress,  dated  December  1,  1911,  the 
Postmaster-General  said,  concerning  this  Document: 

"During  the  year  the  Department  completed  the  investi- 
gation begun  early  in  the  administration  with  the  object  of 
determining  what  it  costs  the  railways  to  perform  this  service, 
and  the  report  of  the  inquiry  was  submitted  to  Congress  on 
the  twelfth  of  August  last.  The  statistics  obtained  during  the 
course  of  the  investigation  disclosed  for  the  first  time  the  cost 
of  carrying  mail  in  comparison  with  the  revenue  derived  by 
the  railways  from  this  service.  ...  If  Congress  gives  the 
recommendation  of  the  Department  in  this  regard  its  favor- 
able consideration  and  authorizes  a  readjustment  of  railway  mail 
pay  in  the  manner  suggested,  it  is  believed  that  the  resulting 
saving  to  the  Government  will  amount  annually  to  about 
$9,000,000.00."  Annual  Eeport  of  the  Postmaster-General,  House 
Document  No.  559,  Sixty-second  Congress,  Second  Session,  pp. 
19-20. 

Those  portions  of  Document  N"u.  105  which  consist  of  reports  and 
investigations  apparently  intended  to  illustrate  the  results  that  would 
follow  the  adoption  of  the  new  basis  of  payment  exclude  from  consid- 
eration, as  will  more  fully  appear  hereinafter,  all  services  and  facil- 
ities except  the  service  of  transportation  on  trains  and  the  facility  of 
space  in  cars  occupied  while  such  movement  is  in  actual  progress  and 
all  elements  of  cost  save  those  of  operation  and  taxes,  that  is  to  say. 
they  exclude  all  the  primary  costs  incident  to  securing  the  capital 
necessary  to  create  the  property  operated.  Therefore,  the  Postmaster- 
General's  recommendation,  if  it  is  not  to  be  regarded  as  wholly  in- 
consistent with  the  argument  that  he  submits  in  its  support,  which  is 
unthinkable,  is  to  be  held  and  considered  to  be  a  recommendation  to 
reduce  railway  mail  pay  below  the  cost  of  the  facilities  and  service.^ 
supplied  by  ignoring  some  services  and  facilities  and  making  payment 
equal  the  sum  of  a  part  of  the  elements  of  cost  (that  is  to  say,  the 
sum  of  operating  and  taxation  costs,  but  not  including  interest  cost) 
of  transportation  services  and  train  facilities. 

The  Postmaster-General  calls  this  proposed  reduction  a  "readjust- 
ment of  railway  mail  pay  on  the  basis  of  cost  with  six  per  cent  profit" 
(Document  105,  p.  3)  and  estimates,  as  has  been  seen,  that  the  resultant 
diminution  of  mail  pay  would  amount  to  approximately  $9,000,000.00 
annually  (Document  105,  p.  3).     As  the  aggregate  sum  paid  for  the 


facilities  supplied  by  the  railways  during  the  fiscal  year  1911  was 
$50,099,537.03*  it  is  evident  that  the  proposed  reduction  amounts  to  about 
eighteen  per  cent  of  the  gross  revenue  which  the  railways  now  derive 
from  this  source.  The  detailed  figures  of  Document  No.  105,  however, 
indicate  that  it  would  be  higher.  They  show  (pages  280,  281)  that, 
during  the  month  of  November  of  the  year  1909,  the  railways  included 
received  $3,607,773.13  for  the  postal  facilities  and  services  they  supplied 
while,  for  the  same  period,  the  Postmaster-General  estimates  that  the 
train  space  they  furnished  cost  them,  in  operating  expenses  and  taxes 
alone,  $2,676,503.75.  As  he  does  not  propose  to  make  a  return  for  any 
other  items  of  cost  and  proposes  to  add  only  six  per  cent  to  the  total  of 
these  items,  it  is  evident  that  if  his  "readjustment"  had  been  in 
effect  they  would  have  received  f06  per  cent  of  $2,676,503.75  or 
$2,837,093.98.  The  last  named  sum  is  21.36  per  cent  less  than 
$3,607,773.13,  the  sum  these  railways  were  paid,  and  this  percentage,  of 
course,  approximates  the  reduction.  In  this  calculation  no  allowance 
is  made  for  the  fact  that  some  railways,  that  is,  land-grant  roads,  ' 
would  he  denied  the  additional  six  per  cent  so  that  the  actual  reduc- 
tion would  he  somewhat  more  than  31.36  per  cent. 

This  brief  statement  discloses  the  fact  that  the  Postmaster-General's 
recommendation  really  rests  upon  certain  almost  obviously  incorrect  and 
misleading  conclusions  which  are,  in  part,  as  follows: 

First.  He  erroneously  assumes  that  the  train  space  oc- 
cupied by  the  mails  is  a  fair  measure  of  the  services  and 
facilities  supplied  by  the  railways  whereas,  in  fact,  they  per- 
form important  terminal  and  delivery  services,  supply  a  vast 
aggregate  of  personal  transportation,  furnish  extraordinary 
station  facilities  and  supply  many  and  costly  additional  serv- 
ices and  facilities  of  which  he  takes  no  account. 


*Tlie  sum  reported  by  the  Postmaster-General  (Postmaster-General's  Auuual 
Report  for  1911,  House  Docunieut  No.  5Ci9,  Sixty-second  Congress  p.  49),  as 
the  cost  of  "transportation  of  domestic  mail  by  railroads,"  is  $50,583,122.9(; 
luit  not  all  of  this  sum  was  paid  to  railways.  The  sum  so  paid  was  actually 
$483,585.94  less.  The  cost,  as  reported,  includes  the  cost  of  the  quadrennial 
weighing  of  the  mails  in  one  of  the  four  weighing  sections,  of  tabulating  the 
results  of  this  weighing  and  perhaps  other  expenditures.  The  railways 
actually  received  only  $50,099,537.02.  This  fact  was  stated  by  the  Honorable 
Second  Assistant  Postmaster-General  in  a  letter,  dated  on  June  7,  1912, 
addressed  to  H.  T.  Newcomb,  statistician  to  the  Committee  on  Railway  Mail 
Pay,  which  letter  is  as  follows :  "In  reply  to  your  letter  of  the  twenty- 
second  ultimo,  asking  for  furtlier  information  relative  to  the  amount  actually 
paid  to  the  raih-oad  companies  during  the  fiscal  year  ended  June  30,  1911,  I 
have  to  advise  you  that  out  of  the  total  of  $50,583,122.96  there  was  expended 
a  total  of  $483,585.94  for  purposes  other  than  railroad  transportation."  The 
average  annual  cost  of  weighing  the  mails  for  the  purpose  of  readjusting 
railway  mail  pay  is  stated  in  Document  No.  105  (p.  15),  as  $400,000.00.  At 
least  this  sum  should,  therefore  be  deducted  from  the  reported  annual  cost  of 
railroad  services,  previous  to  1911,  In  order  to  ascertain  the  annual  aggre- 
gates actually  received  by  the  railways. 


Second.  He  erroneously  assumes  that  expenses  in  the 
operation  of  a  railway  and  taxes  exacted  from  it  constitute 
all  the  cost  of  the  services  it  renders,  thus  overlooking  and 
ignoring  the  fact  that  property  has  to  exist  before  it  can  be 
operated  and  that  its  existence  is  evidence  of  the  investment 
of  capital,  a  reasonable  return  on  which  is  a  necessary  and 
legitimate  element  of  the  cost  of  transportation  and  that  this 
element,  in  the  case  of  railways,  amounts  to  a  very  consid- 
erable fraction  of  the  total  cost. 

The  foregoing  misconceptions  of  fact  are  fundamental  in  character 
and  importance  and  their  destructive  effect  upon  the  argument  of 
Document  No.  105  will  be  further  discussed  herein.  Attention  is  di- 
rected to  them,  at  this  stage,  merely  because  any  statement  of  the  Post- 
mast  er-GeneraVs  plan  which  failed  to  note  that  it  rests  upon  these  basic 
inaccuracies  would  be  seriously  incomplete.  It  should  also  be  noted  at 
the  outset  that  the  second  of  these  misconceptions  leads  to  a  rejection 
of  that  essential  principle  of  fair  treatment  of  the  railway  carriers  of 
mail  proclaimed  by  the  Joint  Commission  to  Investigate  the  Postal 
Service  which  reported  in  1901,  in  part  as  follows: 

"We  are  of  opinion  that  the  true  basis  for  payment  to 
railroads  for  mail  transportation  should  be  such  sums  as  will 
afford  the  railroads  a  fair  compensation  for  the  services  ren- 
dered."    Fifty-sixth  Congress,  Senate  Document  No.  89,  p.  9. 

And  the  Joint  Postal  Commission  continued: 

"It  seems  to  the  Commission  that  not  only  justice  and 
good  conscience,  but  also  the  efficiency  of  the  postal  service 
and  the  best  interests  of  the  country  demand  that  the  railway 
mail  pay  shall  be  so  clearly  fair  and  reasonable  that  while, 
on  the  one  hand,  the  Government  shall  receive  a  full  quid 
pro  quo  for  its  expenditures  and  the  public  treasury  be  not 
subjected  to  an  improper  drain  upon  its  funds,  yet,  on  the 
other  hand,  the  Railway  Mail  Service  shall  bear  its  due  pro- 
portion of  the  expenses  incurred  by  the  railroads  in  the 
maintenance  of  their  organization  and  business  as  well  as  in 
the  operations  of  their  mail  trains. 

"The  transaction  between  the  Government  and  the  rail- 
roads should  be,  and  in  the  opinion  of  the  commission  is,  a 
relation  of  contract;  but  it  is  a  contract  between  the  sov- 
ereign and  a  subject  as  to  which  the  latter  has  practically 
no  choice  but  to  accept  the  terms  formulated  and  demanded 
by    the    former;    and   therefore    it    is    incumbent    upon   the 

6 


sovereign  to  see  that  it  takes  no  undue  advantage  of  the 
subject,  nor  imposes  upon  it  an  unrighteous  burden,  nor 
'drives  a  hard  bargain'  with  it."     Ibid,  p.  10. 

It  is  submitted  that  these  extracts  but  express  considerations  that 
are  obviously  and  fundamentally  correct  and  that  must  prevail  wherever 
justice  is  respected  and  maintained.  But  there  can  be  no  just  compen- 
gation  when  a  reasonable  return  upon  invested  capital  is  refused  and 
the  Postmaster-General  has  confessedly  considered ,  none  of  the  expenses 
necessarily  incurred  in  order  to  procure  capital,  but  only  those  of  opera- 
tion and  for  taxes. 


II. 

DETAILED    ANALYSIS    OF    THE    POSTMASTER-GENERAL'S 

REPORT. 

Although  the  argument  for  a  reduction  in  railway  mail  pay  made 
by  the  Postmaster-General  (Sixty-second  Congress,  House  Document 
No.  105)  is  addressed  to  the  Speaker  of  the  House  of  Representatives 
under  date  as  of  August  12,  1911,  and  the  Congressional  order  for 
printing  was  entered  on  August  15,  1911,  the  Postmaster-General 
caused  its  j^ublication  to  be  suspended,  for  the  purpose,  as  it  is  stated,  of 
making  repeated  changes  and  corrections,  and  it  was  not  until  December 
8,  1911,  that  the  Committee  on  Railway  Mail  Pay,  or  any  of  the  rail- 
ways which  would  be  affected  by  the  adoption  of  the  recommendations 
of  the  report,  were  able  to  obtain  copies  or  were  advised  of  its  contents. 
Soon  after  obtaining  copies  of  the  report,  with  the  accompanying  docu- 
ments and  tabular  statements,  and  having  given  consideration  to  the 
whole  document,  the  Committee,  by  Mr.  Kruttschnitt,  its  chairman,  on 
December  20,  1911,  addressed  a  letter  to  the  Speaker,  which  was,  in  full, 
as  follows : 

"TO  THE  HONORABLE  THE  SPEAKER  OF  THE  HOUSE  OF 
REPRESENTATIVES,    WASHINGTON,    D.    C: 

"My  Dear  Sir:  Your  attention  is  respectfully  invited 
to  the  recently  published  letter  from  the  Postmaster-General 
to  the  Speaker  of  the  House  of  Representatives  (House  Docu- 
ment No.  105),  submitting  a  report  of  his  inquiry  as  to  the 
operations,  receipts  and  expenditures  of  the  railroad  companies 
transporting  the  mails,  and  recommending  legislation  concern- 
ing their  compensation  therefor. 

"This  report  has  been  so  recently  made  public  that  there 
has  not  been  sufficient  time  for  its  detailed  examination  and 


analysis,  but  such  scrutiny  as  has  already  been  possible,  dis- 
closes that  the  data  submitted  are  incomplete,  the  figures  dis- 
torted, the  presentation  unfair,  and  the  conclusions  illogical  and 
unwarranted.  Among  other  things,  it  is  grossly  unjust  to  the 
railroads  in  that: 

"1.  Data  submitted  by  the  railroads  at  the  request  of  the 
Post  Office  Department,  which  are  essential  to  a  complete  un- 
derstanding of  the  subject,  have  been  withheld  and  suppressed. 

"2.  The  Postmaster- General  has  arbitrarily  transferred 
to  the  passenger  service  much  of  the  so-called  ^dead'  space  in 
mail  cars,  although  this  space  could  not  be  utilized  as  pas- 
senger space,  thus  improperly  increasing  the  apparent  car-foot 
miles  of  passenger  service,  and  correspondingly  decreasing  the 
car-foot  miles  of  mail  service. 


(«: 


'3.  The  Postmaster-General  has  apportioned  expenses  in- 
curred for  the  joint  purposes  of  the  passenger  and  freight 
services  between  these  services,  in  accordance  with  a  method 
never  accepted  by  any  one  with  practical  experience  in  rail- 
way accounting  or  operation,  and  condemned  by  the  courts  in 
at  least  two  important  cases.  In  one  of  these  cases  the  opinion 
of  the  Court  states  that  'It  was  conceded  that  the  method  could 
be  made  to  produce  any  desired  result.' 

"4.  The  Postmaster-General  has  wholly  overlooked  the  fact 
that  a  large  part  of  the  cost  incurred  by  the  railways  in  car- 
rying the  mails,  consists  of  interest  on  the  capital  they  em- 
ploy. By  ignoring  all  capital  expenses,  confining  his  attention 
to  mere  operating  costs,  and  proposing  to  return  to  the  railways 
only  the  amount  of  these  operating  costs,  plus  6  per  cent,  he 
urges  a  method  which,  if  applied  generally  to  all  their  business, 
would  render  every  railroad  at  once  bankrupt. 

"In  consideration  of  the  foregoing  and  other  errors  and 
omissions  in  the  report,  we  respectfully  ask,  for  the  railroad 
companies,  a  suspension  of  judgment  and  action  until  they  have 
had  time  to  present  a  complete  and  satisfactory  analysis  of  the 
report,  and  of  all  material  and  relevant  facts.  Preparation  of 
such  a  presentation  has  been  undertaken  and  we  request  that 
when  completed,  we  be  given  an  opportunity  to  place  our  con- 
clusions before  Congress  in  a  suitable  manner. 

"Very  respectfully  yours, 

"The  Committee  on  Railway  Mail  Pay. 

"By  J.  Kruttschnitt,  Chairman.*' 


The  next  purpose  of  this  report  will  be  to  present  detailed  and 
convincing  evidence  of  each  and  every  assertion  in  the  foregoing  letter 
and  they  will  be  taken  up  in  order. 

FIRST. 

Data  submitted  by  the  railroads  at  the  request  of  the  Post  Office 
Department,  which  are  essential  to  a  complete  understanding  of  the 
subject,  have  been  withheld  and  suppressed. 

A. 

STATION     AND     TERMINAL     EXPENSES     DIRECTLY     IN- 
CURRED ON  ACCOUNT  OF  MAIL. 

That  the  facilities  and  services  supplied  by  the  railways  in  con- 
nection with  the  postal  service  go  far  beyond  the  ordinary  incidents 
of  transportation  is  generally  understood  but  the  fact  is  substantially 
ignored  in  the  Postmaster-General's  report.  Some  of  these  extraordi- 
nary services,  being  in  the  nature  of  terminal  and  station  services,  are 
covered  by  the  following  extracts  from  the  Postal  Laws  and  Regula- 
tions : 

"Railroad  companies,  at  stations  where  transfer  clerks  are 
employed,  will  provide  suitable  and  sufficient  rooms  for  hand- 
ling and  storing  the  mails,  and  without  specific  charge  therefor. 
These  rooms  will  be  lighted,  heated,  furnished,  supplied  with 
ice  water,  and  kept  in  order  by  the  railroad  company."  Section 
1186,  second  paragraph. 

"The  specific  requirements  of  the  service  as  to  .  .  . 
space  required.  ,  .  at  stations,  fixtures,  furniture,  etc.,  will 
at  all  times  be  determined  by  the  Post  Office  Department  and 
made  known  through  the  General  Superintendent  of  Railway 
Mail  Service."     Section  1186,  third  paragraph. 

"Railroad  companies  will  require  their  employees  who  handle 
the  mails  to  keep  a  record  of  all  pouches  due  to  be  received 
or  dispatched  by  them,  and  to  check  the  pouches  at  the  time 
they  are  received  or  dispatched,  except  that  no  record  need 
be  kept  of  a  single  pouch  from  a  train  or  station  to  the  post 
office  or  from  the  post  office  to  a  train  or  station  which,  in 
regular  course,  is  the  only  pouch  in  the  custody  of  the  com- 
pany's employees  at  that  point  while  it  is  being  handled  by 
them.  This  is  not  to  be  construed  as  relieving  railroad  com- 
panies from  having  employees  on  trains  keep  and  properly  check 
a  record  of  all  closed  pouches  handled  by  them,  without  ex- 
ception."   Section  1187,  first  paragraph. 


"In  case  of  failure  to  receive  any  pouch  due,  a  shortage  slip 
should  be  made  out,  explaining  cause  of  failure,  and  forwarded 
in  lieu  of  the  missing  pouch.  Specific  instructions  in  regard 
to  the  use  of  shortage  slips  will  be  given  by  the  General  Super- 
tendent  of  Eailway  Mail  Service."  Section  1187,  second  para- 
graph. .  ,       .  > 

"Every  irregularity  in  the  receipt  and  dispatch  of  mail 
should  be  reported  by  the  employee  to  his  siiperintendent  prompt- 
ly, and  if  a  probable  loss  of  or  damage  to  mail  is  involved,  or 
if  the  cause  of  failure  to  deceive  a  pouch  is  not  known,  the 
report  should  be  made  by  wire,  and  the  superintendent  will 
notify  the  division  superintendent  of  Eailway  Mail  Service  with- 
out delay.  A  copy  of  the  employee's  report  should  be  attached 
to  and  become  a  part  of  the  permanent  pouch  record."  Section 
1187,  third  paragraph. 

"Train  pouch  records  will  be  kept  on  file  at  the  head- 
quarters of  division  superintendents  of  railroad  companies  for 
at  least  one  year  immediately  following  the  date  the  mail  cov- 
ered by  them  was  handled,  and  shall  be  accessible  there  to  post 
office  inspectors  and  other  agents  of  the  Post  Office  Depart- 
ment. Station  pouch  records  rwiW  be  kept  on  file  at  the  sta- 
tion to  which  they  apply  for  at  least  one  year  immediately  fol- 
lowing the  date  the  mail  covered  by  them  was  handled,  and 
shall  be  accessible  there  to  post  office  inspectors  and  other  agents 
of  the  Post  Office  Department."  Section  1187,  fourth  para- 
graph, 

"Eailroad  companies  will  require  their  employees  to  sub- 
mit pouch  records  for  examination  to  post  office  inspectors  and 
other  duly  accredited  agents  of  the  Post  Office  Department  upon 
their  request  and  exhibition  of  credentials  to  such  employees." 
Section  1187,  fifth  paragraph. 

"Every  railroad  company  is  required  to  take  the  mails  from, 
and  deliver  them  into,  all  terminal  post  offices,  whatever  may 
be  the  distance  between  the  station  and  post  office,  except  in 
cities  where  other  provision  for  such  service  is  made  by  the 
Post  Office  Department.  In  all  cases  wliere  the  Department 
has  not  made  other  provision,  the  distance  between  terminal 
post  office  and  nearest  station  is  computed  in,  and  paid  for, 
as  part  of  the  route."    Section  1191,  first  paragraph. 

"The  railroad  company  must  also  take  the  mails  from  and 
deliver  them   into  all  intermediate   post  offices  and  postal  sta- 

10 


tions  located  not  more  than  eighty  rods  from  the  nearest  rail- 
road station  at  which  the  company  has  an  agent  or  other  rep- 
resentative employed,  and  the  company  shall  not  be  relieved  of 
snch  duty  on  account  of  the  discontinuance  of  an  agency  with- 
out thirty  days'  notice  to  the  Department."  Section  1191,  sec- 
ond paragraph. 

"At  connecting  points  where  railroad  stations  are  not  over 
eighty  rods  apart  a  company  having  mails  on  its  train  to 
be  forwarded  by  the  connecting  train  will  be  required  to  transfer 
such  mails  and  deliver  them  into  the  connecting  train,  or,  if 
the  connection  is  not  immediate,  to  deliver  them  to  the  agent 
of  the  company  to  be  properly  dispatched  by  the  trains  of  said 
company."    Section  1193. 

"At  places  where  railroad  companies  are  required  to  take 
the  mails  from  and  deliver  them  into  post  offices  or  postal 
stations  or  to  transfer  them  to  connecting  railroads  the  per- 
sons employed  to  perform  such  service  are  agents  of  the  com- 
panies and  not  employees  of  the  postal  service,  and  need  not 
be  sworn;  but  such  persons  must  be  more  than  sixteen  years 
old  and  of  suitable  intelligence  and  character.  Postmasters  will 
promptly  report  any  violation  of  this  requirement."  Section 
1193. 

"Where  it  is  desirable  to  have  mails  taken  from  the  post 
office  or  postal  station  to  train  at  a  terminal  point  where  terminal 
service  devolves  upon  the  company,  in  advance  of  the  regular 
time  of  closing  mails,  the  company  will  be  required  to  make 
such  advance  delivery  as  becomes  necessary  by  the  requirements 
of  the  service."     Section  1191. 

"When  a  messenger  employed  by  the  Post  Office  Depart- 
ment can  not  wait  for  a  delayed  train  without  missing  other 
mails,  the  railroad  company  will  be  required  to  take  charge  of 
and  dispatch  the  mails  for  the  delayed  train,  and  will  be  re- 
sponsible for  the  inward  mail  until  delivered  to  the  messenger 
or  other  authorized  representative  of  the  Department."  Sec- 
tion 1195.. 

"Whenever  the  mail  on  any  railroad  route  arrives  at  a  late 
hour  of  the  night  the  railroad  company  must  retain  custody 
thereof  by  placing  the  same  in  a  secure  and  safe  room  or  apart- 
ment of  the  depot  or  station  until  the  following  morning,  when 
it  must  be  delivered  at  the  post  office,  or  to  the  mail  messenger 
employed  by  the  Post  Office  Department,  at  as  early  an  hour  as 
the  necessities  of  the  post  office  may  require."     Section  1196. 

11 


"When  a  train  departs  from  a  railroad  station  in  the  night 
time  later  than  9  o'clock,  and  it  is  deemed  necessary  to  have 
the  mail  dispatched  by  such  train,  the  division  superintendent 
of  Railway  Mail  Service  will,  where  mail  is  taken  from  and 
delivered  into  the  post  office  by  the  railroad  company,  request 
the  company,  or  where  a  mail  messenger  or  carrier  is  employed 
by  the  Post  Office  Department  will  direct  him,  to  take  the 
mail  to  the  railroad  station  at  such  time  as  will  best  serve  the 
interest  of  the  mail  service.  Such  mail  will  be  taken  charge  of 
by  the  agent  or  other  representative  of  the  railroad  company, 
who  will  be  required  to  keep  it  in  some  secure  place  until  the 
train  arrives,  and  then  see  that  it  is  properly  dispatched."  Sec- 
tion 1197,  first  paragraph. 

"The  division  superintendent  of  Railway  Mail  Service  will 
give  reasonable  advance  notice  to  the  proper  officer  of  the  rail- 
road company,  in  order  that  the  agent  or  representatives  of 
the  company  may  be  properly  instructed."  Section  1197,  second 
paragraph. 

"Railroad  companies  will  be  expected  to  place  their  mail 
cars  at  points  accessible  to  mail  messengers  or  contractors  for 
wagon  service.  If  cars  are  not  so  placed  the  companies  will 
be  required  to  receive  the  mails  from  and  deliver  them  to  the 
messengers  or  contractors  at  points  accessible  to  the  wagon  of 
the  messenger  or  contractor."     Section  1198. 

"A  mail  train  must  not  pull  out  and  leave  mails  which 
are  in  process  of  being  loaded  on  the  car  or  which  the  con- 
ductor or  trainman  has  information  are  being  trucked  from 
wagons  or  some  part  of  the  station  to  the  cars."     Section  1199. 

"At  all  points  at  which  trains  do  not  stop  where  the  Post 
Office  Department  deems  the  exchange  of  mails  necessary  a  de- 
vice for  the  receipt  and  delivery  of  mails  satisfactory  to  the 
Department  must  be  erected  and  maintained;  and  pending  the 
erection  of  such  device  the  speed  of  trains  must  be  slackened 
so  as  to  permit  the  exchange  to  be  made  with  safety."  Section 
1200,  first  paragraph. 

"In  all  cases  where  the  Department  deems  it  necessary  to 
the  safe  exchange  of  tlie  mails  the  railroad  company  will  be 
required  to  reduce  the  speed  or  stop  the  train."  Section  12UU, 
second  paragraph. 

"When  night  mails  are  caught  from  a  crane  the  railroad 
company  must  furnish  the  lantern  or  light  to  be  attached  to 
the  crane   and  keep   the   same   in   proper  condition,   regularly 

12 


placed  and  lighted ;  but  if  the  company  has  no  agent  or  em- 
ployee at  such  station,  the  company  must  furnish  the  light, 
and  the  care  and  placing  of  same  will  devolve  upon  the  De- 
partment's carrier."     Section  1200,  third  section. 

"The  engineer  of  a  train  shall  give  timely  notice,  by  whistle 
or  other  signal,  of  its  approach  to  a  mail  crane."  Section  1200, 
fourth  paragraph. 

The  foregoing  extracts,  all  the  requirements  of  which  are  enforced 
by  fines  and  deductions,  disclose  the  fact  that  many  extraordinary  and 
exacting  services,  involving  responsibility  and  expense,  are  required  of 
railway  mail  carriers  in  addition  to  the  mere  transportation  of  the  mails. 
To  transfer  mail  from  stations  to  post  offices  railways  are  obliged  to 
employ  messengers  and  to  supply  vehicles;  to  furnish  rooms  for  'Tiand- 
ling  and  storing  the  mails,"  they  are  obliged  to  enlarge  their  stations 
and  to  encroach  upon  space  needed  for  yard  purposes,  and  other  extraor- 
dinary services  obviously  entail  considerable  expenditures  as  well  as 
interference  with  the  orderly  routine  of  the  other  business  of  the  carry- 
ing companies.  There  are  also  certain  requirements  of  the  Department 
which  are  not  to  be  found  in  the  regulations,  although  no  railway  feels 
at  liberty  to  oppose  or  disregard  them,  such  as  the  common  demand  that 
postal  cars  be  placed  for  advance  distribution  and  supplied  with  heat  and 
light  while  .so  used.  The  existence  of  important  elements  of  cost  of  this 
character  was  not  overlooked  by  the  Postmaster-Greneral  at  the  time  the 
investigation  which  culminated  in  his  report  was  begun.  On  the  con- 
trary, one  of  the  original  set  of  blanks  on  which  the  railways  were  asked 
to  report  (Form  2602,  see  copy  reprinted  at  pages  28  and  29  of  House 
Document  No.  105)  was  so  entitled  as  to  indicate  that  it  was  intended  to 
show  the  cost  of  supplying  "Station  service"  and  "Station  and  ter- 
minal facilities"  in  connection  with  the  mail.  Among  other  things, 
this  form  called  for  the  following  facts,  to  be  reported  separately  as 
to  each  station,  which  were  ignored  and  excluded  in  the  Postmaster- 
General's  estimates  of  the  cost  of  rendering  the  service  required  by 
the  Post  Office  Department: 

1.  Amount  of  wages  paid  to  messengers  and  porters  em- 
ployed exclusively  in  handling  mails. 

2.  Portion  properly  chargeable  to  mail  service,  pro-rated 
on  basis  of  actual  time  employed,  of  wages  paid  to  station  em- 
ployees a   part  of  whose  time  is  employed   in   handling  mails. 

3.  Amount  expended  for  maintenance  of  horses  and  wagons 
and  for  ferriage,  and  so  forth,  in  connection  with  mail  service. 

4.  Rental  value,  plus  average  monthly  cost  of  light  and 
heat,  of  room  or  rooms  set  apart  for  the  exclusive  use  of  the 
mail  service. 

IS 


5.  Rental  value  of  tracks  occupied  daily  for  advance  dis- 
tribution of  the  mail. 

6.  Average    monthly    cost    of    light    and    heat    for    jwstal 
cars  placed  daily  for  advance  distribution  of  mail. 

7.  Interest   at   the   legal   rate   upon    the   value   of   cranes, 
catchers  and  trucks  required  for  mail   service. 

8.  Total   of  the  previously   enumerated   items  of   cost  of 
rendering  mail  service. 

Over  the  propriety  of  including  every  one  of  these  items  as  ele- 
ments in  the  cost  of  mail  service,  controversy  is  impossible.  The 
Postmaster-General  recognized  this  fact  by  asking  for  data  under  all 
these  heads,  statements  of  all  these  facts  were  rendered  by  the  railways 
in  comjiliance  with  his  request  and  the  expenditures  so  reported  were 
substantial  in  their  amounts,  but  it  seems  subsequently  to  have  been  de- 
cided that  the  suppression  of  these  data  was  not  inconsistent  with  a 
purpose  to  present  an  accurate  and  truthful  statement  of  the  expenses 
directly  incurred  by  the  railways  in  serving  the  Post  Office  Department 
and  all  recognition  of  these  expenses  was  denied  in  the  tabulation  of 
the  data  collected.  There  is  not  a  figure  derived  from  or  represent- 
ing these  data  in  all  the  270  pages  of  tabulated  statistics  of  the 
report.  In  the  18  pages  of  textual  matter  there  is  neither  a  total  nor 
a  conclusion  based  upon  them.  The  summary  statement  signed  by 
Second  Assistant  Postmaster-General  Stewart  does,  however,  contain 
the  following: 

"The  data  reported  by  the  companies  on  Form  2602  as 
to  expenditures  for  station  service  and  station  and  terminal 
facilities  furnished  were  carefully  considered,  and  in  view  of 
the  fact  that  it  was  found  impossible  to  ascertain  the  totals 
of  the  accounts  from  whicli  the  amounts  directly  charged  on 
this  form  should  be  deducted,  and  of  the  fact  that  such  data 
were  found  to  be  unreliable  in  many  instances,  and  of  the 
further  fact  that  it  was  determined  that  the  mail  service  should 
participate  in  all  of  the  station  expenses  upon  a  basis  of  car- 
foot  miles,  it  was  decided  not  to  make  use  of  such  information 
in  connection  with  the  cost  ascertainment."  House  Document 
No.  105,  p.  6. 

The  foregoing  states,  in  effect,  tliat  the  Post  Office  Department 
preferred  arbitrarily  to  assume  that  station  expenses  for  mail  bear  the 
same  relation  to  total  station  expenses  that  the  car-foot  mileage  made 
in  mail  service  bears  to  the  total  car-foot  mileage  of  passenger  trains, 
rather  than  to  accept  data  which  it  had  collected  that  showed  a  differ- 
ent result.  The  vj ell-founded  claim  of  the  railways,  a  claim  that  no 
one  acquainted  with  the  methods  and  exactions  of  the  postal  service 
will  dispute,  is  precisely  to  the  contrary.     Station  service  and  facilities 

14 


required  for  mail  are  greatly  in  excess  of  those  which  have  been 
allowed  for  by  the  arbitrary  method  adopted  by  the  Postmaster-Gen- 
eral. The  fact  tliat  the  totals  of  the  accounts  from  which  these  items 
were  deducted  were  unknown  to  the  Department  is  attributable  solely 
to  the  f^ct  that  it  did  not  ask  to  have  these  facts  reported,  they  could 
readily  have  been  obtained  by  means  of  a  supplementary  inquiry  as 
other  facts  were  obtained,  and  the  omission  of  the  otTicers  conducting 
the  inquiry  to  ask  for  information  certainly  ought  not  to  be  regarded 
as  a  suthcient  reason  for  their  failure  to  tabulate  the  facts  they  did 
obtain.  The  further  suggestion  that  some  of  these  daia  were  "found 
to  be  unreliable,"  is  without  specification  and  it  is  unjust  to  the  rail- 
ways which  at  considerable  expense  to  themselves,  supplied  the  figures 
asked  for. 

The  original  reports  in  the  possession  of  the  Committee  on  Railway 
Mail  Pay  make  it  possible,  in  part,  to  remedy  this  omission  of  the  Post- 
master-General and  to  that  end  the  data  in  these  reports  have  been 
most  carefully  and  accurately  tabulated.  The  committee,  dependent 
upon  the  voluntary  co-operation  of  numerous  railway  othcers  located  in 
many  and  widely  separated  cities,  was  naturally  unable  to  obtain  copies 
of  all  the  reports  sent  to  the  Postmaster-General  and  its  results  are, 
therefore,  necessarily  and  obviously  incomplete.  The  following  aggre- 
gates are  submitted  with  the  observation  that  they  disclose  portions  only 
of  the  expenditures  under  these  heads  which  were  incurred  by  the  rail- 
ways on  account  of  the  mails.  The  reports  available  to  the  Committee 
on  Railway  Mail  Pay  show  that  the  railways  complying  with  its  request 
for  copies  expended  the  following  sums  and  reported  them  to  the  Post 
Office  Department  on  its  Form  No.  2603 : 


Item 


Amount  of  wages  paid  to  messeiiRers  and  ]iorters  employed 
exclusively  in  handling  mails 4 

Portion  properly  ohargeahle  to  mail  service,  prorated  on 
basis  of  actual  time  employed,  of  wages  paid  to  station 
employees  a  part  of  whose  time  is  employed  in  handling 
mails    

Amount  expended  for  maintenance  of  horses  and  wagons  and 
for  ferriage,  etc.,  in  connection  with  mail  service 

Rental  value,  plus  average  monthly  cost  of  light  and  heat, 
of  room  or  rooms  set  apart  for  the  exclusive  use  of  the 
mail    service 

Rental  value  of  tracks  occupied  dail.v  for  advance  distribu- 
tion of  the  mail 

Average  monthly  cost  of  light  and  heat  for  postal  cars  placed 
daily  for  advance  distribution  of  mail 

Interest  at  the  legal  rate  uiton  the  value  of  cranes,  catchers 
and  trucks  required  for  mail  service 


Total 


Amount 


$70,980.84 

108,027.01 
5,640.08 

37,258.93 

47,029.12 

18,400.57 

3,895.36 


•1:401,126.00* 


*This  total    includes   .^9,993.10   reported    by    four    companies   which   gave 
totals  for  these  items,  but  did  not  report  the  items  separately. 


15 


The  Postmaster-General  reported  the  mail  expenses  of  the  rail- 
ways included  in  Document  No.  105,  for  the  month  of  November, 
1909,  as  $2,676,503.75.  It  appears  therefore  that  the  omitted  expendi- 
tures of  these  railways,  for  the  seven  items  just  enumerated,  which 
constitute  only  a  part  of  the  items,  he  arbitrarily  omitted  from  his 
tabulations,  was  not  less  than  $401,126.00,  during  that  month,  or  14.99 
per  cent  of  the  total  he  reported.  As  this  total  of  $401,126.00  covers 
less  than  ninety-two  per  cent  of  the  mail  route  mileage  represented  in 
Document  No.  105  it  is  evident  that  the  true  percentage  of  omission  is 
still  higher. 

B. 

PERSONAL  TRANSPORTATION. 

The  law  enacted  by  Congress  requires  railways  carrying  mails  to 
carry  the  persons  in  charge  thereof  without  any  additional  compensation 
but  by  a  regulation,  which  the  Department  assumes  to  have  the  force 
of  law,  the  requirement  has  been  extended  to  cover  personal  transporta- 
tion for  officers,  agents  and  representatives  of  the  postal  service  whether 
in  charge  of  mails  or  otherwise. 

"Railroad  companies  are  required  to  convey  upon  any  train, 
without  specific  charge  therefor,  all  mail  bags,  post-ofBce  blanks, 
stationery,  supplies,  and  all  duly  accredited  agents  of  the  Post 
Office  Department  and  post-office  inspectors  upon  the  exhibition 
of  their  credentials."  Postal  Laws  and  Regulations,  Section  1184. 

As  this  personal  transportation  hears  no  definite  relation  to  the 
volume  of  mail  carried  on  any  particular  route  and,  whether  paid  for 
in  any  sense  or  otherwise,  its  amount  neither  increases  nor  diminishes 
the  expenses  of  the  Post  Office  Department;  as  it  is,  to  the  persons 
receiving  it,  actually  free  transportation,  it  is  not  surprising  that  liberal 
use  of  these  privileges  is  made.  This  travel  is  particularly  extensive 
on  certain  routes  on  which  the  through  travel  of  the  representatives 
and  agents  of  the  Department  is  naturally  in  some  degree  concen- 
trated and  on  such  routes  it  loses  all  relation  or  proportion  to  the 
volume  of  mail  carried  or  to  the  amount  of  mail  pay.  Further,  the 
Department  demands  for  postal  employees,  in  both  quantity  and  qual- 
ity, free  transportation  far  beyond  that  accorded  to  railway  employees 
and  the  former,  although  carried  free,  are  in  the  same  class,  as  regards 
responsibility  for  accidental  injuries,  as  are  paying  passengers,  a  class 
involving  much  greater  pecuniary  liability  than  that  to  either  railway 
or  express  employees.  In  the  case  of  express  employees  the  principal 
liability  is  assumed  by  the  express  companies  as  a  part  of  their  con- 
tracts with  the  railways.     That,  in  many  instances,  this  privilege  of 

16 


free  transportation  is  eo  enforced  as  to  deprive  the  railways  of  fares, 
both  for  through  travel  and  for  suburban  transportation  to  which  they 
are  justly  entitled  is  beyond  denial.  That  tlie  burden  of  supplying  this 
extensive  volume  of  personal  transportation  is  an  important  element  in 
the  cost  of  rendering  the  services  for  which  the  railways  are  paid  was 
fully  admitted  by  the  Postmaster-General  when  he  addressed  his  in- 
quiries to  the  railways.  Form  2603  (see  House  Document  No.  105, 
p.  28)  requested  the  following  facts  as  to  each  railway: 

1.  Number  of  miles  traveled  by  Department  officials,  in- 
spectors, etc.,  and  railway  postal  clerks  not  actually  in  charge 
of  mails. 

2.  Value  of  above,  at  passenger  rates  not  exceeding  two 
cents  a  mile. 

These  questions  were  answered  by  the  railways  and  the  data 
asked  for  are  in  the  possession  of  the  Post  Office  Department  but 
the  report  contains  no  evidence  of  that  fact,  no  use  has  been  made 
of  these  data,  they  have  not  been  compiled,  aggregated  or  compared 
for  the  information  of  Congress,  whatever  light  they  would  throw 
upon  the  activities  of  the  postal  service  or  the  conditions  under 
which  it  is  aided  by  the  railways  has  been  withheld.  The  only  allu- 
sion to  this  information  in  the  report  is  as  follows : 

"The  information  concerning  the  personal  transportation 
of  railway  postal  clerks  and  agents  of  the  Department  when 
in  charge  of  the  mails  and  when  not  actually  in  charge  of  the 
mails  .  .  .  was  not  used.  It  was  found  impracticable  to 
satisfactorily  and  fully  verify  it.  However,  no  similar  informa- 
tion was  given  regarding  travel  of  officials  and  employees  of 
the  passenger  service,  and  it  is  believed  that  the  omission  of 
these  items  with  respect  to  the  three  classes  of  service  has  not 
materially  affected  the  results,  because  there  was  no  specific  ex- 
penditure for  the  personal  transportation  involved  and  the  mail 
service  participated  in  the  apportioned  expenses  of  the  passenger 
service  on  the  ear-foot  mile  basis."  House  Document  No.  105, 
p.  6. 

These  figures  emanated  from  sources  identical  with  those  from 
wliich  came  all  the  data  used  by  the  Department  and  possess  pre- 
cisely equal  reliability — the  Department  has  had  no  more  opportunity 
to  check  the  other  figures  than  it  has  to  check  these.  Moreover,  the 
suggestion  that  this  omission  is  immaterial  because  the  expenses  of 
the  passenger  service  have  been  apportioned  on  a  car-foot  mile  basis 
is  self-contradictory  as  the  apportionment  which  was  made  rests  upon 

17 


considering  only  the  space  actually  occupied  by  mail  as  chargeable  to 
mail  service  and  charges  all  other  space,  including  that  occupied  by 
officers  and  agents  of  the  Post  Office  Department,  traveling  without 
charge  under  this  requirement,  to  the  other  services  rendered  by  pas- 
senger trains.  Surely,  if  the  cost  of  mail  service  is  to  be  determined 
by  the  space  which  it  requires  and,  in  addition  to  space  occupied  by 
mail  pouches  and  postal  clerks  the  Department  also  demands  and  re- 
ceives space  in  passenger  coaches,  dining  cars,  and  Pullman  sleepers 
and  parlor  cars  for  its  officers  and  agents  who  pay  no  passenger  fares, 
space  which  otherwise  might  be  occupied  by  paying  passengers,  this 
space  ought  to  be  considered  as  a  part  of  the  space  chargeable  to  tlie 
mail  service.  The  Postmaster-General  has  suppressed  the  figures  as 
to  this  travel  although  before  they  were  collected  he  obviously  believed 
it  to  be  an  element  of  importance  and  arranged  to  ascertain  the  facts. 
With  no  intention  to  reflect  discredit  upon  the  purposes  of  the  Depart- 
ment it  is  asserted  that  it  w^as,  in  fact,  unfair  to  suppress  these  facts, 
that  it  would  have  been  unfair  not  to  add  the  space  occupied  in  travel 
of  this  sort  to  the  space  occupied  by  the  mails,  but  that  the  report 
is  even  more  unfair  than  this,  in  that  it  not  merely  fails  to  include 
this  space  in  the  estimates  of  car-foot  miles  made  in  the  mail  service, 
it  not  merely  ignores  this  travel  but  it  has  actually  added  the  space 
required  for  such  travel  to  the  space  occupied  by  paying  passengers.' 
In  this  manner  the  free  transportation  accorded  to  the  agents  of  the 
mail  service  has  become  a  means  of  reducing  the  estimates  of  the  cost  of 
carrying  the  mails.  In  other  words,  this  method  leads  to  the  absurd 
result  that  the  larger  the  volume  of  free  travel  demanded  by  the 
agents  of  the  Post  Office  Department  and  the  more  space  required 
by  them,  the  higher  would  be  the  proportion  of  the  total  passenger 
train  space  which  would  be  assigned  to  passenger  service  and  hence 
the  smaller  the  portion  of  the  total  train  cost  which  would  be  ap- 
portioned to  the  mails.  The  annual  value  of  this  personal  transpor- 
tation, not  required  by  law  but  demanded  by  the  Department,  exceeds 
$1,000,000.00. 

c. 

EELATIVE    RECEIPTS    FROM    PASSENGER,    EXPRESS    AND 

MAIL  TRAFFIC. 

Although  the  passenger  train  services  are  not  proportionately  prof- 
itable, any  just  comparison  of  the  receipts  of  the  railways  from  mail 
traffic  with  the  returns  from  any  other  passenger  train  traffic  which 
they  carry  will  show  that  the  mail  service  falls  farther  below  the  level 
of  reasonable  remuneration  than  any  other  among  the  services  rendered 

18 


on  such  trains.  In  order  to  make  clear  the  fact  that  such  a  showing 
would  be  the  natural  consequence  of  a  comparison  made  upon  the  basis 
chosen  by  the  Postmaster-General,  that  of  relative  car-foot  mileage,  tlie 
Committee  on  Railway  Mail  Pay  lias  carefully  tabulated  data  reported 
to  the  Department  in  response  to  his  requests,  having  been  supplied  for 
tliat  purpose  by  many  railways  with  duplicate  copies  of  the  reports,  with 
tlie  results  shown  by  the  table  on  page  20. 

The  totals  and  averages  on  page  80  have  been  derived  from  a  pains- 
taking and  accurate  tabulation  of  returns  made  by  187  railways,  oi)erat- 
ing  2,411  mail  routes  and  178,709.96  miles  of  line,  to  the  Post  Office 
Department  in  compliance  with  its  request  and  on  the  forms  by  its 
officers  prepared.  They  doubtless  epitomize  the  results  which  woidd 
appear  from  a  complete  tabulation  of  all  the  data  received  by  the  De- 
partment. 

That  information  as  to  the  relative  returns  resulting  from  the 
different  services  supplied  hy  the  railways  is  essential  to  sound  judg- 
ment as  to  the  reasonableness  of  charges  is  elementary  and  fundamental 
and  it  is  respectfully  submitted  that  Congress,  in  connection  with 
any  report  concerning  railway  mail  pay  is  entitled  to  all  the  pertinent 
information  in  the  possession  of  the  officer  or  department  making  the 
report.  These  omitted  facts  were  in  the  possession  of  the  Post  Office 
Department,  it  had  been  considered  worth  while  to  collect  them,  but 
again  facts  of  primary  significance  were  withheld.  These  suppressed 
data  were  collected  on  the  Postmaster-General's  inquiry  blank  designated 
as  Form  2004  which  is  printed  on  page  30  of  House  Document  No. 
105.  No  explanation  of  the  reasons  for  this  withholding  of  arailahle, 
relevant  and  important  facts  is  to  he  found  anyivhere  in  the  report. 

SECOND. 

llie  Postmaster-General  has  arbitrarily  transferred  to  the  pas- 
senger service  much  of  the  so-called  "dead"  space  in  mail  cars,  although 
this  space  could  not  be  utilized  as  passenger  space,  thus  improperly 
increasing  the  apparent  car-foot  miles  of  passenger  service,  and  cor- 
respondingly decreasing  the  car-foot  miles  of  mail  service. 

A. 

CAR-FOOT  MILEAGE  DEFINED. 

As  will  more  fully  appear  later  in  this  report  (see  page  32  et 
seq.)  the  Postmaster-General  has  made  the  relative  "'car-foot  mileage" 
devoted,  respectively,  to  passengers,  to  express  and  to  mail,  the  basis 
of  apportioning  operating  cost  and  taxes  and  has  also  used  the  same 

19 


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20 


data  as  a  means  of  comparing  both  the  present  gross  receipts  and  his 
estimates  as  to  net  receipts  from  these  different  services.  Before 
setting  forth  the  manner  in  which  his  methods  have  unjustly  dimin- 
ished the  assignment  of  space  to  the  mails  and  correspondingly  in- 
creased the  assignment  to  passengers,  it  is  desirable  to  explain  clearly 
the  meaning  of  a  "car-foot"  and  a  "car-foot  mile"  as  those  units  are 
used  in  the  report.  Measuring  the  inside  length  of  a  car  from  end 
to  end  and  stating  the  length  in  feet  gives  the  number  of  "car-feet" 
for  that  car.  Ascertaining  the  car-feet  of  each  car  in  a  train  and 
aggregating  them  produces  a  total  which  is  the  number  of  car-feet 
for  the  train.  In  other  words,  each  linear  foot  of  space  available  for 
traffic  or  for  the  handling  or  service  of  traffic  in  a  car  or  train  is  a 
"car-foot."  A  car-foot  combined  with  motive  power  and  moved  a 
mile  becomes  a  "car-foot  mile;"  multiply  the  number  of  car-feet  in  a 
train  by  a  number  equal  to  the  number  of  miles  traversed  by  the  train 
and  the  product  thus  obtained  measures  the  movement  in  terms  of 
car-foot  miles.  Space  is  ordinarily  measured  in  square-feet  and  it 
should  be  understood  that  the  car-foot  differs  from  a  square-foot  in 
a  car  in  that  while  the  latter  consists  of  144  square  inches  the  former 
is  a  linear  foot  measured  clear  across  the  car  and,  therefore,  assuming 
the  inside  width  of  the  car  to  be  nine  feet,  would  contain  nine  square 
feet  or  1,206  square  inches.  Tt  should  also  be  clearly  understood  that 
the  concept  of  the  "car-foot,"  as  used  by  the  Postmaster-General  and  in 
this  report  is  confined  exclusively  to  those  portions  of  the  car  or  train 
which  are  required  for  the  occupation  or  accommodation  of  traffic  while 
the  train  is  in  motion  and  excludes  engine  and  tender  lengths  as  well 
as  vestibule  and  platform  space.  Another  fundamental  characteristic  of 
this  method  of  admeasurement  is  that  it  includes  aisle  space  in  passenger 
coaches,  sleepers  and  parlor  cars  as  well  as  smoking-rooms,  lavatories, 
toilet  rooms,  dining  cars,  and  club  and  lounging  cars  or  compartments. 

B. 

"DEAD  SPACE"  DEFINED. 

The  term  "dead  space"  as  used  by  the  Postmaster-General,  is  seri- 
ously misleading.  An  analysis  of  the  transportation  conditions  which 
are  involved  readily  discloses  the  fact  that  the  space  which  he  so  desig- 
nates belongs  invariably  to  one  of  two  classes.  It  is  either  (a)  working 
space  required  for  the  accommodation  of  the  persons  or  traffic  actually  in 
process  of  transportation  or,  (b)  unused  space  necessarily  provided  in 
order  to  accommodate  persons  or  traffic  which  may  presently  seek  trans- 
portation and  in  such  case  must  be  cared  for.  The  aisles  of  a  passenger 
car,  used  for  the  ingress  and  egress  of  passengers,  fhe  lavatories,  the 

21 


smoking  rooms,  all  dining  car  space,  etc.,  constitute  working  space  but 
this  space  is  not  properly  designated  as  "dead"  space  unless  that  term 
is  understood  to  express  neither  absence  of  utility  nor  of  productivity. 
Such  space  is  an  absolute  necessity  of  the  service,  'i'rains  in  suburban 
])assenger  service  leave  the  cities  Avhich  they  serve  with  ttie  seats  nearly 
all  tilled,  unused  space  accumulates  as,  at  each  successive  station,  more 
passengers  debark  than  are  taken  up — but  this  unusued  space  is  a  neces- 
sity of  the  service  and  its  cost  ought  unquestionably  to  be  met  by  the 
receipts  from  this  branch  of  the  service.  All  such  space  is  "dead  space," 
as  the  term  has  been  applied  by  the  Postmaster-General  but  it  is  not  in 
any  sense  useless  or  unnecessary  space,  much  less  is  it  space  which  can 
he  provided  without  cost  to  tJie  railways  or  that  ought  to  go  nnrecom- 
pensed  by  their  revenues. 

The  obstacle  to  clear  thinking  involved  in  this  misleading  nomen- 
clature having  been  removed,  it  is  pertinent  to  observe  that,  using  the 
term  in  (he  sense  in  which  it  is  used  in  Document  No.  105,  "dead 
space,"  as  well  as  "dead  weight,"  is  an  universal  incident  of  transpor- 
tation upon  almost  any  scale  and  by  almost  any  means.  Tlie  laborer 
with  his  wheelbarrow  carries  his  load  in  but  one  direction;  the  weight 
of  his  wheelbarrow  is  "dead  weight,"  the  space  occupied  by  the  load 
(luring  ojie-half  of  his  round-trip  is  "dead  space"  during  the  otlier 
half.  'J'he  milk  wagon  making  its  morning  rounds  accmnulHtes  "dead 
space"  as  it  distributes  its  "paying  load."  Tlie  grain-carrying  trans- 
Atlantic  steamers,  being  unable  usually  to  obtain  westbound  cargoes 
equal  in  bulk  to  the  food-stuffs  which  they  carry  eastward,  have  much 
"dead  space"  on  their  westward  trips.  Railway  traffic  affords  no  exce]> 
lion  in  llie  general  rule.  Although  the  genius  of  rate-making  officers 
has  f(jr  more  than  a  generation  been  largely  devoted  to  efforts  to  develop 
equality  of  loading  in  different  directions  there  is  no  considerable  route 
over  which  the  empty-car  movement  and  the  partially-loaded  car  move- 
ment are  not  matters  of  continuing  concern.  More  than  this,  it  is  not 
unc(mimon  to  liave  seasonal  variations  in  volume  of  traffic  so  that  a 
heavy  einpty-iar  movement  in  one  direction  is  unavoidable  at  one  season 
although  during  the  balance  of  the  year  there  is  an  equally  heavy 
movement  of  unloaded  cars  in  the  reverse  direction.  "Dead  space"  is 
also  of  importance  where,  for  any  reason,  the  load  is  wholly  or  partially 
distributed  while  Ihe  train  or  car  is  en  route  as,  for  example,  in  local 
less-than-car-lol  moMMnonl  of  freight  and,  as  already  noted,  in  snhnrhan 
passenger  service. 

In  the  mail  service  so-called  "dead  space"  of  holii  varieties  is  un- 
avoidable and  important  in  its  extent  and  cost.  Closed  mail  pouches 
may  occupy  but  a  small  amount  of  floor  space  in  the  end  of  a  baggage 
car  but  this  is  only  a  fraction  of  the  space  that  must  be  provided   in 

22 


their  service.  In  order  that  pouches  may  be  taken  on  and  put  off  at 
each  mail  station  there  must  be  "working  space"  in  the  car,  aisles  lead- 
ing to  the  doors  must  be  kept  free  and  open  and  no  impediment  to 
prompt  and  efficient  handling  can  be  permitted.  Earely,  if  ever,  on  any 
route,  is  the  volume  of  mail  equal  in  both  directions  and  the  delivery 
of  mail  at  intermediate  stations  is  seldom  equalled  by  the  mail  taken 
up  at  the  same  stations.  There  are  many  cases  in  which  larger  postal 
cars,  or  apartment  cars,  or  more  storage  cars  are  required  in  one  direc- 
tion than  in  the  other.  Obviously  these  cars  must  be  returned  or  the 
service  could  not  be  maintained,  it  is  equally  obvious  that  the  "dead 
space"  in  baggage  cars  carrying  closed  pouches  of  mail  must  equal  the 
difference  between  the  loading  with  mail  at  any  particular  time  or  point 
en  route  and  the  maximum  quantity  of  mail  at  any  time  or  point.  Such 
temporarily  unused  space  is  palpably  necessary. 

C. 

RELATION  OF  "DEAD  SPACE"  TO  COST  OF  ANY  SERVICE. 

It  is  perfectly  plain  that  if  a  car  or  part  of  a  car  must  be  returned 
empty  or  if  it  must  be  carried  during  any  part  of  its  necessary  move- 
ment empty,  the  paying  load  which  it  has  in  the  other  direction  or 
during  the  balance  of  the  journey,  ought  to  bear  the  expenses  of  the 
empty  movement.  The  justice  of  this  principle  is  self-evident — it  re- 
quires neither  elaboration  nor  discussion.  As  a  consequence  of  the  fore- 
going there  are,  in  practice,  two  ways  in  which  it  would  be  reasonable 
to  treat  the  dead  space  in  passenger  train  service  if  it  should  be  con- 
sidered practicable  to  ascertain  the  total  cost  of  such  service  and  to 
apportion  that  total  among  passengers,  express  and  mail  in  proportion 
to  the  space  required.  No  criticism  of  the  treatment  of  "dead  space" 
would  have  been  made  herein  had  the  Postmaster-General  adopted 
either  of  the  following  plans: 

First.     Added  the  "dead  space"  incident  to  each  branch  of 
service  to  the  paying  space  of  tliat  service,  or, 

Second.      Ignored   "dead   space"   made   in   all   services   and 
made  the  apportionment  on  the  basis  of  paying  space  only. 

D. 

WHAT  THE  POSTMASTER-GENERAL  DID. 

The  Postmaster-General  adopted  neither  of  the  foregoing  plans. 
On  (lie  contrary  he  unjustly  deducted  from  the  mail  service  much  of 
the  dead  space  necessarily  incident  to  that  service  and  added  it  to  the 

23 


space  attributed  to  the  passenger  traffic  although  before  the  addition 
was  made  passenger  space  had  included  all  the  dead  space  actually 
incident  to  the  transportation  of  persons.  He  insisted  on  the  assign- 
ment to  passengers  of  "working  space"'  necessary  for  the  mails  in  bag- 
gage cars  although  if  such  space  were  taken  away  they  could  not  be 
handled,  he  refused  to  regard  as  mail  space  reserve  space  where  larger 
cars  or  compartments  than  were  presently  asked  for  by  the  Department 
were  supplied,  although  the  extra  space  was  indispensable  in  the  work- 
ing of  the  mails,  and  he  transferred  to  the  passenger  service  unused 
space  when  the  maximum  mail  movement  in  one  direction  exceeded  that 
in  the  other  or  such  maximum  was  not  reached  during  the  period 
covered  by  his  investigation.  It  may  be  noted,  parenthetically,  that 
even  in  the  reports  rendered  by  the  railways  the  space  occupied  by 
officers,  agents  and  representatives  of  the  Post  Office  Department  not 
in  charge  of  mails,  who  are  furnished  witli  transportation  as  an  incident 
of  the  carriage  of  the  mails  and  without  any  other  compensation  there- 
for, had  been  included  in  the  space  apportioned  to  passenger  travel — 
plainly  it  ought  to  be  considered  as  space  assigned  to  mail  service. 
Express  space  was  made  to  include  all  ''dead  space"  incident  thereto, 
so  that  the  mail  service,  alone,  was  singled  out  for  exceptional  treatment 
and  in  such  a  way  as  seriously  to  understate  the  demands  which  it  makes 
upon  passenger  train  service  and  greatly  to  reduce  the  portion  of  the  cost 
of  such  train  service  assigned  to  the  mails.  These  modifications  of  the 
data  correctly  reported,  not  susceptible  of  justification  upon  any 
sound  transportation  principle,  were  carried  so  far,  in  the  tabula- 
tions of  the  Post  Office  Department  that  its  results,  which  are 
stated  for  railway  routes  having  a  total  length  of  194,977.55  miles 
(Document  No.  105,  p.  58),  show  a  smaller  car-foot  mileage  made 
in  the  mail  service  than  was  actually  reported  by  the  railways  con- 
cerned for  routes  having  a  length  of  178,709.96  miles.  The  table  on 
page  25  compares  the  Department's  total  figures  for  194,977.55  route 
miles  with  the  totals  of  reports  which  it  received  covering  178,709.96 
route  miles. 

As  the  difference  between  the  route  miles  covered  by  the  Depart- 
ment's aggregates  and  by  those  of  the  routes  whose  reports  were  made 
available  to  the  Committee  on  Railway  Mail  Pay  amounts  to  8.34  per 
cent  of  the  former  it  would  appear  that  the  excess  of  the  Department's 
figures  of  car-foot  miles  ought,  in  every  case,  roughly  to  approximate 
the  same  percentage.  But  the  foregoing  shows  that  while  the  figures 
of  the  Department  as  to  car-foot  miles  made  in  the  passenger  and  ex- 
press service  are  able  to  support  this  test  of  their  accuracy  the  same  test 
demonstrates  the  inaccuracy  of  the  Department's  figures  as  to  car-foot 
miles  made  in  the  mail  service.     This  may  be  shown  in  another  way. 

24 


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25 


In  the  following  table  the  average  number  of  car-foot  miles  per  mile 
of  mail  routes,  for  each  service,  as  reported  by  the  Post  Office  Depart- 
ment is  compared  with  the  averages  resulting  from  the  data  reported 
to  the  Department  by  the  railways. 


Average  number  of 

car-foot  miles  per  mail 

route  mile 

Excess  of  averages  from 
railway  reports 

Service 

Reported  by 

Post  Office 

Department 

Calculated 

from 

reports  of 

railways 

Car-foot 
miles 

Per  cent  of 

Department's 

figrures 

Passenger   

Express    

Mail    

54,544 
7.074 
4,750 

55,410 
7.387 
6,453 

866 

313 

1,703 

1.59 
4.42 

35.85 

Total    

66.368 

60.250 

2.882 

4..34 

The  foregoing  shows  that  the  extensive  modifications  of  the  data 
fchowing  car-foot  miles  made  in  the  mail  service,  reported  by  the  rail- 
ways, have  resulted  in  an  average  for  that  service,  per  mile  of  the  mail 
routes  covered,  that  must  be  increased  by  35.85  per  cent  to  equal  the  real 
average  discoverable  from  the  reports  rendered  by  railways  constituting 
92.66  per  cent  of  the  mileage  covered  by  the  Department's  report.     This 
percentage  of  difference  is  more  than  eight  times  the  percentage  result- 
ing from   comparing  the  Department's  fgurrs  for  the  express  service 
with  those  compiled  by  the  Committer  on  Eailway  Mail  Pag  and  more 
than  twenty-two  times  the  difference  as  to  the  passenger  service.     It  is 
no  doubt  true  that  the  omissions  in  the  figures  available  to  the  Com- 
mittee on  Railway   Mail   Pay  are   principally   those   representing  mail 
routes  having  a  volume  of  traffic,  in  all  services,  more  or  less  below  the 
averages  resulting  from  its  tabulations  but  while  this  is  freely  admifted 
it  is  plain  that  the  omitted  routes  could  not  so  greatly  offset  the  average 
for  the  mail  service  as  to  overcome  even  a  major  fraction  of  the  enor- 
mous difference  of  35.85  per  cent  in  the  average  of  car-foot  mileage  for 
mail  service.    The  omissions  may,  however,  and  probably  do,  account  for 
the  divergencies  as  to  the  other  services.     '^Jlic   manner  in   which    the 
data  reported  by  particular  roads  were  modified  in  the  Post  Office  De- 
partment in  order  to  obtain  the  results  presented  in  the  last  two  of  the 
foregoing  tables  is  illustrated  by  tlie  comparisons  on  page  27  between  the 
figures  reported  to  the  Department  by  the  Atchison,  Topeka  &  Santa 
Fe  Eailway  system  and  those  presented  in  Document  No.   105    (pages 
38-0,  60)  as  representing  ihe  same  system. 

These  comparisons  show  that  the  Department,  without  giving  any 
explanation  for  its  action  reduced  the  reports  of  car-foot  mileage  of  the 
Atchison,  Topeka  &:  Santa  Fe  Railway,  made  in  the  mail  service.  36.45 
per  cent  while  making  no  material  change  in  the  data  for  the  other 
services. 


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27 


other  changes  by  the  Post  Office  Department  in  the  car-foot  milp- 
age  made  in  the  mail  service,  reported  in  response  to  its  request,  are 
disclosed  by  the  following  table:      (See  insert  28A). 

Nowhere  in  the  Postmaster-General's  report  is  there  any  explanation 
of  the  reasons  for  these  very  extensive  changes  in  the  basic  data  utilized 
in  his  calculations  nor,  indeed,  is  there  any  intimation  that  any  modifi- 
cations of  importance  were  made.  There  is  no  admission  that  any 
changes  at  all,  arbitrary  or  otherwise,  were  made  save  in  tlie  bare  state- 
ment on  page  6  that  discrepancies  and  inaccuracies  were  corrected.  Tt 
is  submitted  that  this  acknowledgement  is  utterly  inadequate  recogni- 
tion of  changes  which,  as  shown  by  the  statement  (Insert,  28A),  covering 
only  ,the  roads  named,  aggregate  210,320,652  car-foot  miles,  or  an  aver- 
age of  21.28  per  cent.  Apparently  it  was  thought  to  be  proper  that 
Congress  should  be  left  to  understand  that  barring  minor  and  rela- 
tively unimportant  corrections  the  data  reported  had  been  obtained 
from  the  railways  and  were,  therefore,  presumably  accepted  by 
them  as  truthful  statements  of  facts.  Nothing  could  be  more  con- 
trary to  the  real  situation.  As  has  been  seen  the  statements  made  by 
the  railways  were  radically  reduced  in  nearly  every  instance;  the  car- 
riers assert  and  are  prepared  to  sustain  the  essential  accuracy  of  their 
reports.  The  nnits  of  the  Department's  calculations  are  necessary  if 
its  results  are  to  be  satisfactorily  checked  and  corrected  and  the  Post- 
master-General should  be  required  to  transmit  the  original  data  to  Con- 
gress and  thus  to  afford  an  opportunity  to  trace  in  detail  the  changes 
which  he  has  felt  authorized  to  make  and  for  testing  the  validity  of 
these  changes  and  of  the  resulting  averages  and  aggregates.  By  no 
other  means  can  the  true  figures  be  established  with  certainty  nor  can 
the  railways  otherwise  be  accorded  a  fair  opportunity  to  demonstrate 
the  complete  accuracy  of  their  original  returns.  It  can  be  demonstrated 
that  scrutiny  of  these  original  data  and  computations  would  disclose 
numerous  and  serious  clerical  errors  and  omissions  by  the  Department 
resulting  in  a  further  unjust  reduction  in  the  train  space  credited  to 
the  mails.  Such  errors  have  since  been  conceded  by  the  Department 
in  the  case  of  individual  roads,  the  aggregate  of  the  conceded  correc- 
tions in  the  case  of  one  system  being  about  19,000,000  car-foot  miles, 
and  these  concessions  by  the  Department  go  far  to  discredit  the  entire 
value  of  Document  No.  105. 

B. 

FURTHER  PROOF  OF  ARBITRARY  TREATMENT  OF  SPACE. 

The  absence  of  any  uniform  or  rational  relation  between  the  car- 
foot  mileage  for  mail  service  reported  in  Document  No.  105  and  the 

28 


services  demanded  by  and  supplied  to  the  Post  Office  Department  is 

made   fullv   aunarent  bv  an   PYaminatinn    ni  +}iP   fio-nroo    rrivon    fr^i^   o^w,^ 


of  onlyinree-quarters  of  a  mile  or  3.13  per  cent;" both  routes  have  closed 
pouch  service  only;  both  are  now  paid  at  the  minimum  per  mile  rate. 


29 


Atliuitic    Cuasl    Uiie 

Rnltimore   iS:    Ohio. . 

Bes^sfuier  &  Luke  Krie 

liostoii  &  Maine 

Ceutral  of  Georfjia 

Central  Railrojid  iif  Xew  Jersey 

Central  Vermont 

l^iiicago  &  Noi'tliwestern 

Chicago.  Burlington  &  Quincy 

Chicago,  Milwaukee  &  St.  Piuil 

(Chicago,  RofU  Island  &  Gulf 

Chicago,  Rock  Island  &  Pacitic 

Cleveland.  Cincinnati,   Cliicago  &  St.   Louis. 

( 'olorado    Midland 

Delaware  &  Hudson  Company 

Delaware,  Lackawanna  &  Western 

Denver  &  Rio  Grande 

VA  Paso  &  Soutliweslern 

Erie    . . 


Fort  Worth   &  Denver  City 

Georgia,  Southern  &  Florida 

(ivand  Rapids  &.    Indiana 

Grand    Trunk 

Great  Nortliern 

Illinois    Central 

International   &  Great  Northern 

Lake  Erie  &  Western 

Lake  Shore  &  Mieliigau  Southern 

I>eliigh  Viiliey 

Long  Island. , 

Louisville  &,   Nashville 

Maine  Ceutral 

Michigan    Central 

.Minneapolis,  St.  Paul  &  Sault  Ste.  Marie 

Mi-ssouri   Pacific ■ 

Nashville,   Chattanooga  &   St.    Louis........ 

New  York  Central  &  Hudson  River 

New  York.  Chieago  &  St.   Louis 

New  York,  Ontario  &  Western , 

Norfolk  &   Western 

Northern  Central 

Northern  I'acitic 

itregon  Railroad  &  Navigiition 

Oregon  Short  Line 

Pennsylvania  Company 

Pennsylvania  Railroad 

I'eoria    .&    ICastern 

Philadelphia  &  Reading  and  allied  lines 

I'liiladelpliia.  R:iltiiuore  &  Washington 

Pittsburgh  &  Luke  Krie 

Pittsburgh,  Cincinnati.  Chicago  &  St.  Louis. 

St.  Louis,   Iron  Mountain  &  Southern 

St.   Louis   Southwestern 

San  Antonio  &  .\ransas  Pass 

San  Pedro.  Lns  Angeles  lS:  Salt  Lake 

Seahoard   Air   Line 

Sf)uthern   , 

Southern    Pacific 

Texas   &   Pacific 

Toledo,  Peoria  &  Western 

Union  Paritic 

Vandalia    

Virginian 

Wabash   

West  .Torsey  &   Seashore 

Wheeling    i.\:    Lake    Erie 

Wichita    Valley 


Total 


id 


Car-foot  niUes  made  In  mall  service  incIudlDg  dead  space. 

As  rcportffl 

.\s  reported  by 

Deducted  by  Postiiiaater-General 

by 
Company 

Oeneral 

.VmooDt 

Pereeut. 

lU.80U,427.(il! 

13,6.59.016.79 

3.140.S1O.S7 

18.09 

33,134.01(i.0O 

25,391,705.45 

7,7.42.31li,r,5 

23.37 

424.741.00 

300.775.09 

123.965.91 

29.19 

14,820.815.00 

11,371,921.93 

3.448,993.07 

23.27 

6,030.349.00 

5,245,036.62 

785,312,38 

13.02 

2.1ll2.:)r)0.00 

1,530.359.74 

031,990.20 

29.23 

2,2(l.-i.l.S4.00 

1,007,204.00 

357.980.00 

15.80 

:!S.|12(I.!I70.S0 

32.240,574.98 

6.371,395.82 

16.50 

.•,2i.'ii;.i"0.no 

50.700.723.99 

11.485.406.01 

18.45 

4r,.;;L'i;,'j:'.7.00 

35,471.925.00 

10.854.312.00 

23.43 

1  .J  I  S.I  i.-i.K.oo 

1,098,873.06 

119.184.04 

9,78 

;is.(;,".i,iu2.fi0 

:!0,188,296.09 

.     8.402.865.91 

21.90 

21.950,S4U.OO 

17.610.4.38.37 

4,340,110.03 

19.77 

387,803.00 

294.4S2.91 

93,380.09 

24.08 

3,833,870.0(1 

2,270.541.27 

1.563,.334.73 

40.78 

4,731,72ii.00 

4.3S7.502.00 

344.223.00 

-.28 

5.830,923.00. 

4.710.3S0.45 

1,126,542.55 

19.,30 

•5.SRr,.(lH4.40 

1.854.584.86 

1.032,049.54 

35,75 

n.l-IT.r,'.  12.00 

10,333,747.00 

1,113,945.00 

9.73 

1.7TS,744.42 

1.644,222.00 

134.522.42 

7.56 

2,o:j2,.".ou.oo 

1,277.000.50 

755.50,8.44 

37.17 

2.708,457.00 

2.272.770.53 

435.680.47 

16.09 

5,772,050.71 

4,821,869.70 

050.181.01 

16.40 

43,450,891.00 

30,889.628.00 

.  12,567,363.00 

28.92 

37,537,425.00 

i!5,083.865.00 

11,853,500.00 

31.58 

4,601,135.00 

3.604,401.00 

900,643,10 

19.70 

2,457,4110.00 

1.465,02.3.42 

092,4315.58 

40.38 

43.477,203.00 

40,868,448.10 

2.008,814.84 

O.OO 

5.713,580.00 

4,054,625.25 

1,658.954.75 

29.04 

1.210.724.00 

953.315.87 

257.408.13 

21.20 

j(i.77ii.:n4.ii(i 

18,191.222,62 

2.579.091.38 

12.42 

."i,o,si.;io;inii 

4.472.248.00 

009.655.00 

12.00 

.S..-,,S(l.ll1fi.ttJ 

7,170.420.36 

1.400.595.64 

16.42 

12  4:S4  .SSO.OO 

9.286.840.71 

3.198,045.29 

25.62 

■•i.:'.;i.n,2io.oo 

10,887,104,88 

4..508,1,35.12 

21.07 

f>.100,447.09 

6.105.558.37 

2.0.54.889..S2 

25.18 

54,096,823.00 

49.076.804.00 

5.019.019.00 

9.28 

893,792.00 

,837.040.38 

56.751.62 

0.35 

1,087,251.00 

9S2.820.94 

104,430.06 

9.G0 

8,707,177.30 

7.2111.608.89 

1,415,568.41 

10.26 

2,894.093.00 

2.606.27M.64 

288,410.36 

9.90 

29,073.240.40 

19.814.226.98 

9,259,013.42 

31.85 

8,411,872.00 

5.636.912.25 

2,774,080.35 

32.99 

11,588,199.00 

7,635.493.00 

3,052.706.00 

34.11 

28,747,137.00 

23.288.845.22 

5.458.291.78 

18.99 

57,819,519.00 

46,074,972.68 

10.844..546.32 

18.T0 

1,814,670.00 

1,381,441.10 

433.22,8.00 

23.87 

,        5,220,350.04 

3.270.478.16 

1.953,907.88 

7.4:t9..S33.23 

705.207.00 

li74.064.7» 

91,142.21 

:12.3SH.524.00 

24.054,004.27 

8,328,919.73 

25.72 

12,3,S2,,3G3.83 

2.727.080.17 

18.00 

2.U41.WIO.00 

1.611.046.90 
1.155.670.86 

430..848.10 
130.862.14 

21.10 
10.17 

0  .(O**  260  00 

1.878.241.20 

1.084,018.80 

36.59 

12,914.121.00 

10.403,436.76 
28.9,83.910.08 

2,510,684.24 
8,207.091.32 

19.44 
22.07 

31.010.229.97 

8,300,1.88.03 

21.25 

7  4"'l  70.1  00 

6.271.189.34 

1. 1 58.5 15.66 

15.59 

527.598.44 

611.013.56 

53.69 

23,458.6.59.00 

I3.77o.319.00 

36.90 

14  S"7  412.00 

10.908,799.55 

3.01.8,612.45 

26.43 

."i44  599.no 

4311.071.19 

113,927.81 

20.92 

10.232,004.31 

4,9110.204.69 

23.19 

1  l:',2.3S7.00 

093.987.04 

438,399.96 

38.71 

su  .'11:1.00 

577.055,02 

234,257,38 

28.87 

r,r,ii.iil."..(«i 

324.988.60 

225,026.34 

40.91 

l».S,ri24.2S6.02 

778,107,633.71 

210,326,6.52.31 

21.28 

services  demanded  by  and  supplied  to  the  Post  Office  Department  is 
made  fully  apparent  by  an  examination  of  the  figures  given  for  some 
of  the  smaller  routes  and  comparing  them  with  the  services  rendered 
on  those  routes.  The  table  on  page  30,  prepared  from  the  Postmaster- 
General's  Table  8-A  (Document  No.  105,  pp.  282-3),  supplemented, 
as  to  the  figures  of  one  column  only,  by  reference  to  the  annual  reports 
of  the  Second  Assistant  Postmaster-General  for  the  years  1908  to  1911, 
inclusive,  amply  demonstrates  the  truth  of  this  statement. 

The  foregoing  table  includes  every  route,  having  closed  pouch  serv- 
ice only  and  for  which  the  data  contained  in  the  second,  third  and 
seventh  columns  are  given,  represented  in  Table  8-A  of  the  report. 
The  figures  in  the  second,  third  and  seventh  columns  are  taken  from 
that  report  and  those  in  the  fourth  are  based  upon  facts  shown  in  suc- 
cessive annual  reports  of  the  Second  Assistant  Postmaster-General.  The 
figures  in  the  fifth  column,  headed  "pound  miles  during  November, 
1909,"  are  the  product  of  those  in  the  second  and  third  columns  multi- 
plied by  thirty;  those  in  the  sixth  column,  headed  "service  miles  during 
November,  1909,"  are  the  product  of  those  in  the  second  and  fourth 
columns;  those  in  the  eighth  are  quotients  of  those  in  the  fifth  divided  by 
those  in  the  seventh,  and  those  in  the  ninth  are  quotients  of  those  in  the 
sixth  divided  by  the  same'  divisors.  The  wide  range  in  the  relations  dis- 
closed by  the  figures  in  the  last  two  columns  of  this  table  points  plainly 
to  the  unreliability  of  the  method  adopted  in  assigning  car-foot  miles  and 
it  is  clear  that  if  such  inconsistent  results  are  found  as  to  these  smaller 
routes,  divergencies  from  the  facts  at  least  equal  in  proportions  must 
vitiate  the  more  elaborate  and  difficult  calculations  necessary  in  connec- 
tion with  the  more  important  mail  routes.  It  is  startling,  therefore,  to 
find  that  the  Postmaster-General  has  assigned  a  car-foot  mile  to  every 
eight  pound  miles  in  one  instance  (Route  No.  110,331)  while  in  another 
the  proportion  is  one  car-foot  mile  to  167  pound  miles  (Route  No. 
169,019).  Equally  surprising  is  the  variation  in  the  relation  between 
.ervice-miles  and  car-foot  miles,  the  range  shown  by  the  table  being 
rom  0.49  service  miles  (Route  No.  147,039)  per  car-foot  mile  to  2  04 
;  Route  No.  116,021). 

A  particularly  strange  contrast  appears  in  the  Postmaster-Gen- 
rals  Table  8-A  between  route  176,064,  operated  between  Plumas  Junc- 
lon  and  Clio,  California,  by  the  Sierra  Valleys  Railway,  and  the  route 
2imediately  following  in  the  table  which  is  168,030,  operated  by  the 
a-izona  &  Colorado  Railroad,  of  the  Southern  Pacific  Company's  syslen. 
etween  Cochise  and  Gleason,  Arizona.  These  routes  are  36  14  and 
5.37  miles  in  length,  respectively,  thus  showing  a  difference  in  length 
.  only  three-quarters  of  a  mile  or  3.13  per  cent;  both  routes  have  closed 
meh  gervice  only;  both  are  now  paid  at  the  minimum  per  mile  rate, 

29 


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the  difference  in  length  giving  a  difference  in  annual  compensation  of 
$32.92;  reference  to  page  256  of  the  annual  report  of  the  Post  Oflice 
Department  for  the  year  1910  shows  that  on  route  170,064  the  service 
is  six  times  per  week  in  both  directions  while  page  238  of  tho  same 
report  shows  that  on  route  168,020  the  service  is  seven  times  per  week; 
the  average  daily  weight  of  mails  given  in  Document  105"  for  these 
routes  is  136  and  192  pounds,  respectively.  Here,  then,  are  two  routes 
that  present  no  wide  or  marked  difference  of  any  sort,  they  carry  about 
the  same  distance  very  similar  quantities  of  mail,  in  the  same  manner, 
and  with  little  difference  in  frequency  of  service.  It  would  be  reason- 
able to  suppose  that  the  car-foot  mileage  assigned  to  these  routes  would 
not  vary  more  than  these  controlling  conditions  of  service.  But  such  is 
not  the  case.  The  route  carrying  only  136  pounds  of  mail  daily 
(176,064)  has  been  assigned  3,246.48  car-foot  miles  and  the  route  car- 
rying 192  pounds  has  been  assigned  only  1,810.19  car-foot  miles.  Thus 
an  excess  of  79.34  per  cent  in  the  car-foot  miles  assigned  to  route 
176,064  over  those  assigned  to  route  168,020  rests  upon  no  more  sub- 
stantial basis  than  16.67  per  cent  more  frequent  service  and  2.13  per  cent 
greater  length  of  haul  and  is  despite  an  excess  of  average  daily  weight 
on  the  latter  route  of  41.18  per  cent.  Curiously  enough  the  vagaries  of 
the  methods  followed  by  the  Department  provide  an  offset  for  this  as- 
signment of  80  per  cent  more  car-foot  miles  to  one  route  tlian  to  the 
other  and  table  8-A  further  shows  that  the  Postmaster-General  estimates 
the  cost  incurred  in  its  mail  service  of  tiie  route  whicli  he  says  made 
3,246.48  car-foot  miles  as  $15.25  and  that  of  the  route  which  made 
1,810.19  car-foot  miles  as  $20.71.  These  figures  give  an  average  car- 
foot  mile  cost  of  11.441  mills  for  tlie  Arizona  &  Colorado,  which  is  a 
part  of  a  great  system,  as  compared  with  an  average  of  4.69  mills  for 
the  Sierra  Valleys  Railway,  a  difference  of  243.94  per  cent  of  the  smaller 


average. 


The  following  statement  demonstrates  still  more  vividly  the  inequal- 
ities resulting  from  the  application  of  the  Postmaster-General's  method 
of  assigning  space. 


Route 
No. 

Length 
in  miles 

Average              Car-foot 

daily              miles  made          Number 
weight                '"  closed       '     of  trains 
1909  '                pouch               per  day 
service* 

i                              i 

Number  of 
car-foot 

miles 
reported 

by    railway 

107,074 
110,024 

12.64 
12.25 

291 

989 

2,679 

2,521 

10 
10 

4,790 
6,734 

These  two  routes  have  only  closed  pouch  service  and  are  about  the 
same  length,  have  the  same  number  of  trains  carrying  mail  and  similar 
conditions  in  every  way,  except  No.  110,024  carries  about  tliree  and  one- 
♦Reported  in  Pocument  No.  105. 


31 


half  times  as  much  mail  as  107,074,  nevertheless  the  Postmaster-General 
credits  107,074  with  158  car-foot  miles  in  excess  of  the  number  credited 
to  No.  110,024.  Such  inconsistencies  as  these  counteract  any  superficial 
plausibility  that  the  report  might  otherwise  possess  and  destroy  all  con- 
fidence in  the  accuracy  of  its  conclusions  as  to  space  or  cost  of  service. 


F. 

THE  EFFECT  OF  THESE  ARBITRARY  METHODS.  . 

Under  the  methods  applied  by  the  Postmaster-General  and  by 
reason  of  the  recommendation  which  he  bases  upon  these  figures  the 
facts  as  to  relative  space  devoted,  respectively,  to  passengers,  express 
and  mail  become  of  the  first  importance.  They  are  the  facts  which 
control  the  estimates  of  cost  and,  therefore,  the  recommendation  as  to 
compensation.  By  arbitrarily  reducing  the  car-foot  mileage  made  in 
the  mail  service  of  any  company  the  Postmaster-General  reduced  the 
estimate  of  cost  of  carrying  the  mail  for  that  company  because,  by  his 
method,  cost  is  largely  a  derivative  of  car-foot  miles,  and  he  also  re- 
duced his  proposal  as  to  its  compensation  for  he  asks  to  be  authorized  to 
base  payment  upon  his  alleged  costs.  Using  the  data  as  to  the  Atchison, 
Topeka  &  Santa  Fe  System,  in  the  table  on  page  27  it  is  possible  to 
ascertain  just  how  much  the  changes  affected  the  results  claimed  by 
the  Postmaster-General  as  representing  the  mail  operations  of  that  sys- 
tem. Turning,  first,  to  pages  272  and  273  of  the  report  it  appears  that 
in  his  table  7  the  Postmaster-General  reports  the  "operating  expenses  and 
taxes  chargeable  to  passenger  traffic"  of  the  Atchison,  Topeka  &  Santa 
Fe  as  $1,964,620.10,  that  no  part  of  this  was  directly  charged  to  mail 
and  that  $97,186.52  was  apportioned  to  mail.  A  simple  arithmetical 
calculation  supplies  the  omitted  element  in  this  statement  and  discloses 
the  fact  that  $84,803.47  of  the  $1,964,620.10  was  directly  charged  to 
passengers  and  express  and  that  the  balance,  $1,879,816.63  was  appor- 
tioned on  the  car-foot  mileage  basis.  As  the  Department  had  allowed 
only  5.17  per  cent  of  passenger  train  space  to  the  mails  it  assigned  only 
5.17  per  cent  of  this  total  expense  to  the  mails.  But  the  company  re- 
ported 7.63  per  cent  of  its  passenger  train  space  as  devoted  to  mail  and 
not  5.17  per  cent,  the  figure  used  by  the  Postmaster-General.  If  the 
latter  had  used  the  company's  figure  the  cost  apportioned  to  mail,  by  his 
method,  would  have  been  $143,430.01  instead  of  $97,186.52  as  stated  in 
table  7.  The  revenue  from  mail  of  this  system  is  given  in  the  same 
table  as  $159,567.06,  so  that  if  the  Department  had  used  the  accurate 
figures  reported  by  the  company  it  would  have  found  a  moderate  sur- 
plus over  operating  cost  and  taxes  of  but  $16,137.05  instead  of  the  sur- 
plus of  $62,380.54  which  it  claimed  to  find.    And  this  result  would  have 

32 


been  inevitable,  except  for  the  arbitrary  changes  in  the  data  as  to  space, 
in  spite  of  the  fact  that  the  reported  operating  cost  of  the  ^Ailole  pas- 
senger train  service  is  very  much  too  low.  Wliat  is  true  as  to  the  effect 
of  these  changes  with  resprct  to  the  Atchison,  Topel-a  S  Santa  Fe's  fig- 
ares  is  true  as  to  siihstanrialhj  every  companij  included  in  the  report. 


G. 

CONCLUSIO^T  NECESSARY  FEOM  THESE  FACTS. 

The  inevitable  conclusion  from  these  necessarily  destructive  crit- 
icisms drawn  from  the  figures  of  the  report  and  the  public  records  of  the 
postal  service  is.  that  all  the  elaborate  tables  prepared  in  the  Post 
Office  Department,  so  far  as  they  purport  to  show  car-foot  mile- 
age made  in  the  mail  service,  are  based  upon  radical  modifications 
of  the  data  reported  at  its  request  and  upon  arbitrary  and  undis- 
closed estimates  with  the  result  that  they  throw  no  light  whatever 
upon  the  real  or  relative  extent  or  cost  of  the  services  and  facilities 
supplied  by  the  railways.  On  the  contrary,  they  destroy  the  value 
of  every  calculation  in  which  they  are  an  element  and,  as  they  enter 
into  the  most  fundamental  computations  which  Document  No.  105 
contains  they  deprive  the  whole  report  of  whatever  value  it  might 
otherwise  possess.  Until  these  data  are  carefully  checked  and  fully 
corrected,  and  the  modifications  which  these  corrections  would  entail 
extended  to  the  figures  that  are  dependent  upon  or  result  from  the  use 
of  car-foot  mileage  the  use  of  Document  No.  105  as  a  basis  or  guide  in 
the  formulation  of  legislation  would  be  unfair,  unwise  and  indefensible. 

THIRD. 

The  Postmaster-General  lias  apportioned  expenses  incurred  for  the 
joint  purposes  of  the  passenger  and  freight  services  between  these  serv- 
ices, in  accordance  with  a  method  never  accepted  by  any  one  with  prac^ 
tical  experience  in  railivay  accounting  or  operation. 

The  fairness  of  railway  mail  pay  can  be  tested  by  apportioning 
operating  expenses  between  passenger  and  freight  traffic,  and  then  mak- 
ing a  secondary  apportionment  of  the  passenger  expenses  between  mail 
and  other  kinds  of  traffic  carried  on  passenger  trains.  This  method  in- 
volves charging  directly  to  each  kind  of  traffic  all  expenses  pertaining 
exclusively  thereto,  and  the  apportionment,  on  some  fair  basis,  of  those 
expenses  which  are  common  to  more  than  one  kind  of  traffic. 

In  accordance  with  the  request  of  the  Postmaster-General,  the  rail- 
ways estimated  the  cost  of  conducting  the  mail  service  in  the  manner 

33 


Just  explained  and  reported  the  results  to  the  Postmaster-General.  After 
first  charging  to  each  service  the  expenses  wholly  due  to  it  they  appor- 
tioned the  common  expenses  between  the  passenger  and  freight  services, 
following  (with  inconsequential  exceptions)  the  method  most  generally 
employed  for  that  purjDose, — namely  the  apportionment  of  these  expenses 
in  the  proportions  of  the  revenue  train  mileage  of  each  service.  Having 
estimated,  in  this  way,  the  operating  expenses  attributable  to  passenger 
trains,  the  railways  assigned  to  the  mails  the  portion  of  this  aggregate 
indicated  by  the  proportion  of  the  total  passenger  train  space  required 
for  the  mails.  Using  this  method,  186  railways,  operating  2,370  mail 
routes,  with  a  total  length  of  1?6,T16  miles,  ascertained  and  reported 
that  for  November,  1909,  the  operating  expenses  (not  including  taxes), 
for  conducting  the  mail  service  were  $4:,009,18-±.  The  Postmaster-Gen- 
eral states  (Document  105,  page  281),  that  all  the  railways  represented 
in  the  foregoing,  and  enough  others  to  increase  the  mileage  represented 
to  19-1,978  miles,  were  paid  for  the  same  month  only  $3,607,773.13.  It 
thus  appears  that  the  pay  was  far  below  the  operating  expenses,  with- 
out making  any  allowance  for  taxes  or  for  a  return  wpon  the  fair  value 
of  the  property  employed. 

While  different  methods  are  in  use  for  ascertaining  the  cost  of  pas- 
senger train  service  and  the  results  produced  by  such  methods  may  show 
considerable  variation,  yet  the  mail  pay  is  so  far  below  reasonable  com- 
pensation, from  the  standpoint  of  the  cost  of  the  service  and  a  return 
upon  the  value  of  the  property,  that  no  method  can  be  reasonably  urged 
which  would  not  demonstrate  the  non-compensatory  character  of  the 
present  mail  pay.  This  is  illustrated  by  the  method  which  the  Post- 
master-General himself  emploj^ed,  as  the  character  of  that  method  is 
such  that  it  necessarily  produces  the  very  lowest  estimate  of  cost  for 
the  passenger  train  service. 

The  Postmaster-General,  by  his  method  of  apportionment 

arrived  at  a  cost  of $2,676,503.75 

But  this  must  be  increased  on  account  of  his  erroneous 

apportionment  of  car  space  by 800,802.00 

And  also  on  account  of  his  refusal  to  assign  expenses 

directly  incurred  in  the  mail  service   (page  15) ....     401,126.00* 

Total,  according  to  the  Postmaster-General's  method 
of  apportioning  costs  between  passenger  and  freight 
traffic    T  .  .$3,878,431.75 

Thus  even  the  Postmaster-General's  method  of  apportioning  costs 
between  freight  and  passenger  traffic  produces  an  operating  cost  in  excess 

*  There  may  be  some  duplication  in  this  item,  but  to  eliminate  it  would 
require  an  elaborate  computation  which,  in  view  of  the  broad  margin  of  ex- 
penses over  receipts,  is  wholly  superfluous.  Whatever  duplication  exists  must 
be  small  in  comparison  with  this  margin. 


return  upon  the  fair  value  of  the  property  or  necessary  but  non-income 
of  the  total  pay  received  by  the  railways,  leaving  nothing  whatever  for 
producing  improvements. 

There  is  no  allowance,  in  any  of  these  estimates  of  cost,  for  the 
large  volume  of  free  transportation  supplied  to  officers  and  agents  of 
the  Post  Office  Department,  when  not  in  charge  of  mail,  although  this 
amounts  to  over  50,000,000  passenger  miles  annually  and,  at  the  low 
average  rate  of  two  cents  per  mile,  would  cost  the  Post  Office  Depart- 
ment more  than  $1,000,000  per  year. 

FOURTH. 

The  Postmasier-General  has  ivholly  orerloolced  the  fact  that  a 
large  part  of  the  costs  incurred  by  the  raihvays  in  carrying  the  mails, 
consists  of  interest  on  the  capital  they  employ.  By  ignoring  all  capi- 
tal expenses,  confining  his  attention  to  mere  operating  costs,  and  pro- 
posing to  return  to  the  raihvays  only  the  amount  of  these  operating 
costs,  plus  six  per  cent,  he  urges  a  method  ivhich,  if  applied  generally 
to  all  their  business,  ivould  render  every  railroad  at  once  bankrupt. 


POSTMASTER-GEXERAL    ADMITS    THAT    SOME    ITEMS    OF 

EXPENSE  WERE  OMITTED. 

Attention  has  already  been  called  herein  to  the  admissions  in 
Document  No.  105  that  neither  the  expenditures  on  account  of  station 
services  and  terminal  facilities  (see  pages  9-16)  nor  the  cost  of  personal 
transportation  furnished  without  special  charge  therefor  to  the  officers 
and  agents  of  the  postal  service  (see  pages  16-18)  were  included  in  its 
estimates  of  cost.  Attention  has  also  been  directed  to  the  specific  ad- 
mission that  only  two  kinds  of  cost  were  considered,  which  admission 
was  made  in  the  following  words: 

"It  is  shown  that  upon  this  basis  of  calculation,  the  infor- 
mation furnished,  and  the  assignment  of  operating  expenses 
and  taxes  (the  factors  of  expense  considered),  the  performance 
of  mail  service  at  the  present  rates  is  profitable  to  many  com- 
•  panies  and  unprofitable  to  others,  .  .  ."  Document  No.  105, 
p.  14. 

B. 

THE   POSTMASTER-GENERAL  IGNORES   THE    FACT  AFTER 

HIS  ADMISSION. 

Yet  after  this  admission  the  report,  curiously  and  inconsistently 
enough,  proceeds  to  assert  that  the  figures  show  the  relation  between 

35 


actual  cost  to  the  railways  and  their  present  mail  pay.     The  sentence 
last  above  quoted  continues,  in  the  very  next  words,  as  follows: 

"but  that  the  net  result  shows  that  the  Government  is  paying- 
more  for  the  service  than  it  costs  the  railroad  companies  to 
perform  it;  furthermore,  that  this  excess  over  cost  and  6  per 
cent  profit  is  about  $9,000,000  a  year;  that  in  cases  where  rail- 
road companies  are  carrying  the  mails  at  a  profit  the  per  cent 
of  profit  over  the  cost  of  performing  the  service  varies  in  almost 
every  instance,  ranging  from  a  low  to  a  high  rate,  and  that  in 
cases  where  railroad  companies  are  carrying  the  mails  at  a  loss 
the  per  cent  of  loss  compared  with  the  cost  of  performing  the 
service  varies  in  the  same  manner."'  Document  No.  105,  pp. 
14-15. 

Eeferring,  over  his  own  signature,  to  the  foregoing,  the  Postmaster- 
General  says: 

"The  committee  estimates  that  through  a  readjustment  of 
railway  mail  pay  on  the  basis  of  cost  with  six  per  cent  profit  a 
saving  to  the  Government  could  be  made  of  about  $9,000,000.'^ 
Document  Xo.  105.  p.  3. 

Anr  in  his  annual  report  to  the  President,  dated  December  1,  1911 : 

"The  statistics  obtained  during  the  course  of  the  investi- 
gation disclosed  for  the  first  time  the  cost  of  carrying  mail 
in  comparison  with  the  revenue  derived  by  the  railways  from 
this  service.  ...  If  Congress  gives  the  recommendation 
of  the  Department  in  this  regard  its  favorable  consideration 
and  authorizes  a  readjustment  of  railway  mail  pay  in  the  man- 
ner suggested,  it  is  believed  that  the  resulting  saving  to  the 
Government  will  amount  annually  to  about  $9,000,000.''  An- 
nual Eeport  of  the  Postmaster-General  for  the  fiscal  year  1911,^ 
pp.  19-20. 

The  Second  Assistant  Postmaster-General  makes  substantially  the- 
same  statement  but  in  words  which  point  definitely  to  a  source  which 
discloses  the  incomplete  nature  of  the  estimates  of  alleged  cost.  He 
says : 

"A  computation  has  been  made,  based  on  Table  7,  of  the 
amount  of  revenue  the  companies  or  systems  reporting  would 
receive  if  their  compensation  for  mail  service  were  based  on  the 
cost  of  carrying  the  mails  and  six  per  centum  of  such  cost. 
The  result  indicates  that  the  companies  represented  in  the  com- 
putation would  receive  annually  under  such  method  of  payment 
about  $9,000,000  less  tlian  at  present."  Document  Xo.  105^ 
p.  t. 

36 


Turning  to  Table  7  (Document  Xo.  105,  pp.  272-281)  there  is 
no  difficulty  in  verif3^ing  the  facts  already  stated  as  to  the  factors  of 
cost  included  and  as  to  those  ignored.  The  truth  is  disclosed  bv  the 
table  headings.  Thus,  as  to  the  Abbottsford  &  ^Northeastern  Eailroad, 
the  first  company  shown,  the  table  headings  and  the  entries  under  them, 
on  page  272,  are  as  follows: 


Table  heading 


Total  operating  expenses    (passenger  and  freight) 

Taxes    

Total  operating  expenses  and  taxes 

Total   operating  expenses   and   taxes   chargeable   to   passenger 

traffic    •• 

Passenger  traffic  operating  expenses  and  taxes  chargeable  to 
mail  service : 

Directly  chargeable    

Apportioned    

Total    


Entry 


$1,522.10 

90.49 

1.012.59 

268.19 


nothing 
5.20 
5.20 


It  will,  of  course,  be  noted  that  the  items  of  expenses  shown  in 
the  foregoing  are  those  of  operation  and  taxation  only;  all  other  ex- 
penses are  absolutely  ignored.  Yet  the  next  page  shows  that  this  ob- 
viously incomplete  item  of  $5.20  was  compared  with  the  company's  mail 
pay  receipts  for  the  month,  $54.25,  and  the  whole  excess,  $49.05,  shown 
as  "gain  from  mail  service.'"  That  the  company  had  any  other  ex- 
penses than  those  enumerated  is  wholly  ignored.  And  the  same  is 
true  as  to  every  other  company  and  as  to  the  whole  of  the  Post- 
master-General's report. 

c. 

THE  FACTORS  IN  COST  OF  PRODUCTION. 

The  science  of  political  economy  may  be  almost  said  to  begin 
with  the  classification  of  the  factors  of  production  under  the  three 
heads  of  labor,  land  and  capital  and  the  explicit  recognition  that  each 
of  these  factors  entails  a  distinct  element  of  cost  of  production.  Thus, 
labor  receives  wages,  which  constitute  an  element  of  cost  of  produc- 
tion ;  land  receives  rent,  which  is  another  element,  and  capital  receives 
interest,  wliicli  is  a  third  element.  The  term  "interest"  as  thus  used 
is  the  exact  equivalent,  in  economic  nomenclature,  of  the  term  "reason- 
able return  on  investment,"  as  used  in  ordinary  parlance  to  denote  the 
cost  directly  and  properly  occasioned  by  the  use  of  capital.  Where  a 
government  is  supported  in  whole  or  in  part  by  taxes  on  production  the 
sums  so  paid  may  not  improperly  be  treated  as  an  additional  element  in 
cost  of  production  and,  under  modern  conditions,  in  which  the  whole 
process  of  production  is  rarely  under  unified  control,  the  cost  of  ma- 
terials is  also  in  the  nature  of  an  item  of  such  cost,  at  least  from  the 

37 


point  of  view  of  any  separate  enterprise  or  establishment.  Every  one  of 
these  items  of  cost  must  be  satisfied  or  there  is  loss ;  until  they  are  all  fully 
met  there  can  be  no  such  thing  as  profit.  Eailways  have  capitalized  the 
rents  of  their  rights  of  way  and  other  land  holdings  and  it  is  sufficient 
therefore,  to  speak  of  the  cost  of  production  of  the  services  they  sup- 
ply as  including  only  the  four  elements  of  (a)  reasonable  return  on  in- 
vestment or  interest,  (6)  wages,  (c)  cost  of  materials  and  (d)  taxes. 
Operating  expenses  include  wages  and  cost  of  materials  (i.  e.,  fuel,  rails 
for  replacement,  etc.,  etc.)  So  the  Postmaster-General  has  actually  in- 
cluded three  of  the  four  factors  and  excluded  the  other,  that  is  to  say, 
he  has  ignored  the  recognized  right  of  investors  to  a  fair  return  upon 
the  fair  value  of  the  property  necessarily  employed  to  render  the  services. 
To  sppak  of  '"'six  per  cent  profit,"  as  the  Postmaster-General  has  (Docu- 
ment No.  105,  p.  3)  when  there  has  been  no  allowance  for  any  return 
to  investors,  an  essential  and  inevitable  part  of  the  cost  of  production, 
is  a  gross  and  misleading  misuse  of  terms  that  have  definite  and  estab- 
lished meanings.  Eailways  are  much  less  able  to  ignore  the  rights  of 
investors  to  proper  and  regular  returns  than  some  other  undertakings, 
because,  with  ver}'  few  exceptions,  their  entire  property  holdings  are 
pledged  by  mortgages  given  to  secure  interest  pa3'ments.  To  be  unable 
to  pay  interest,  therefore,  spells  bankruptcy.  From  the  point  of  view 
of  the  traveling  and  shipping  public  a  reasonable  recognition  of  the  right 
of  the  owners  of  railway  property  to  receive  returns  upon  their  invest- 
ments reasonably  proportioned  to  its  fair  value  is  equally  important. 
The  rapidly  growing  industries  of  the  United  States  continually  require 
the  services  of  more  and  better  railway  facilities  and  their  urgent  de- 
mands can  be  met  only  by  the  annual  addition  of  very  large  sums  to 
the  capital  invested  in  American  railways.  This  needed  capital  cannot 
be  obtained  unless  the  promise  of  reasonable  returns  thereon  is  supported 
by  evidence  that  capital  already  invested,  under  competent  managment 
is  able  to  earn  fair  returns.  If  Congress  should  now  adopt  the  atti- 
tude of  the  Postmaster-General,  as  developed  in  Document  No. 
105,  and  ignore  all  capital  expenses  in  fixing  rates  of  payment  for 
the  mail  facilities  and  services  supplied  by  the  railways,  it  would 
be  notice  to  all  potential  investors  in  railway  property  that  the 
policy  of  the  Federal  Government  had  been  so  formulated  as  to 
deny  their  right  to  reasonable  compensation  for  the  use  of  their 
capital. 

D. 

EAILWAY     INVESTOES     AEE     CONSTITUTIOXALLY     PEO- 
TECTED  IN  THE  EIGHT  TO  EEASONABLE  EETUENS. 

The  Postmaster-General  appears  to  have  overlooked  the  fact  that 
the  Constitution  of  the  United  States  protects  the  owners  of  railway 

38 


property  against  such  a  Congressional  confiscation  of  the  right  to  use 
their  property  as  he  proposes.  In  recommending  a  plan  of  payment 
which  excludes  any  return  whatever  upon  the  value  of  the  property 
used  in  rendering  the  services  required  by  the  Post  Office  Department 
he  has  proposed  a  plan  that  would  be  absolutely  repugnant  to  the  fol- 
lowing well-known  provisions  contained  in  Article  V  of  the  Amend- 
ments : 

"No  person  shall  ...  be  deprived  of  .  .  .  prop- 
erty, without  due  process  of  law;  nor  shall  private  property  be 
taken  for  public  use,  without  just  compensation." 

It  is  not  proposed  or  in  any  way  necessary  to  enter  upon  an 
elaborate  constitutional  argument  for  everyone  knows  that  the  fore- 
going and  the  similar  prohibition  contained  in  the  Fourteenth  Amend- 
ment, have  repeatedly  been  applied  to  prevent  action  similar  in  char- 
acter, albeit  much  less  drastic,  to  that  now  proposed  by  the  Postmaster- 
General.  One  citation,  and  that  from  a  decision  of  the  Supreme  Court 
of  the  United  States,  will  suffice : 

''The  corporation  may  not  be  required  to  use  its  property  for 
the  benefit  of  the  public  without  receiving  just  compensation  for 
the  services  rendered  by  it.     .     .     . 

''We  hold,  however,  that  the  basis  of  all  calculations  as  to 
the  reasonableness  of  rates  to  be  charged  by  a  corporation  main- 
taining a  highway  under  legislative  sanction  must  be  the  fair 
value  of  the  property  being  used  by  it  for  the  convenience  of 
the  public.  .  .  .  What  the  Company  is  entitled  to  ask  is 
a  fair  return  upon  the  value  of  that  which  it  employs  for  the 
public  convenience."  Smyth  v.  Ames,  169  U.  S.  466,  546-7; 
42  L.  ed.  819,  849. 

In  the  case  from  which  the  foregoing  is  quoted  the  Supreme 
Court  affirmed  a  decision  preveniing  the  enforcement  of  a  schedule 
of  maximum  rates  enacted  by  the  Legislature  of  Nebraska  as  to  two 
companies  (among  others)  Avith  regard  to  which  the  Court  had  found 
that  they  would  have  earned,  in  the  years  under  consideration,  more 
than  their  operating  expenses  because,  as  said  in  the  opinion: 

''the  receipts  or  gains,  above  operating  expenses,  would  have 
been  too  small  to  affect  the  general  conclusion  that  the  act,  if 
enforced,  would  have  deprived  each  of  the  railroad  companies 
involved  in  these  suits  of  the  just  compensation  secured  to 
them  by  the  Constitution"  Smyth  v.  Ames,  169  U.  S.  466,  547; 
42  L.  Ed.  819,  849. 

Although  the  Fourteenth  Amendment  in  particular  has  repeatedly 
been   invoked   to   prevent   the   enforcement   of   rates   prescribed   under 

39 


lesfislative  autlioritv  which  the  courts  have  held  would  amount  to  a 
confiscatiou  of  the  use  of  railway  propert}'  by  depriving  its  owners  of 
a  return  on  its  fair  value,  that  is  to  say,  of  interest,  no  legislature  has 
ever  yet  acknowledged  an  intention  to  fix  rates  so  low  as  to  have  that 
result.  Until  the  Postmaster-General  made  the  recommendation 
embodied  in  Document  No.  105  no  public  officer  had  ever  avowed 
a  purpose  to  refuse  to  any  railway  carrier  a  fair  return  on  the  fair 
value  of  any  property  used  to  render  any  service,  no  legislature  had 
ever  enacted  a  law  which  it  admitted  would  have  that  effect,  no 
State  or  National  railroad  commission  had  ever  claimed  that  power 
exists  to  ignore  the  right  of  property  to  a  reasonable  return  and, 
therefore,  no  court  has  ever  yet  been  required  to  pass  upon  the 
validity  of  law-made  rates  in  the  light  of  a  frank  admission  that 
they  would  do  no  more  than  provide  for  operating  expenses  and 
taxes  leaving  nothing,  or  substantially  nothing,  to  the  owners  of 
the  property.  That  such  a  contention  will  ever  be  made  in  any  court 
is  bevond  relief. 


E. 

AMOUXTS'  OF  EXPENSES  IGXORED  BY  THE 
POSTMASTEPi-GEXERAL. 

The  Interstate  Commerce  Commission  has  just  published  the  re- 
port of  its  Statistician  for  the  year  which  ended  with  June  30,  1910 
from  which  it  appears  (p.  TO)  that  the  gross  receipts  of  the  railways, 
amounting  to  $3,005,112,836  (This  sum  includes  operating  revenues, 
$2,?50,667,4:3o ;  net  revenue  from  outside  operations,  $2,225,455  and 
other  income,  $252,219,946,  and  thus  obviously  represents  duplications 
in  such  instances  as  the  pa^inent  of  rent  for  leased  railway  out  of 
operating  revenues  when  all  or  part  of  the  amount  so  paid  becomes,  in 
turn,  "other  income,"  through  receipt  of  interest  or  dividends  on  se- 
curities of  tlie  leased  lines  held  by  the  lessee.  These  duplications  are 
unavoidable,  however,  if,  on  the  expense  side,  are  properly  to  be  set  up 
such  inter-corporate  payments  as  those  of  rentals  of  leased  railways.) 
during  that  year,  were  disposed  of  as  showTi  by  the  table  on  page  41. 

Omitting  all  expenses,  included  in  the  foregoing  table,  that  are 
not  absolutely  necessary  to  avoid  bankruptcies  and  the  disruption  of 
operating  systems,  the  expenses  shown  in  the  table  at  the  top  of  page 
42,  in  addition  to  those  allowed  for  by  the  Postmaster-General,  at  the 
very  least,  must  be  jDrovided  for  out  of  earnings: 

40 


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41 


Omitted  expenses 

Item 

Amount 

Per  cent  of  ex- 
penses consid- 
ered by  Post- 
master-General 

Rents  for  lease  of  other  roads 

Hire  of  equipment,  debit  balance. .... 

Payments  for  joint  facilities 

Miscellaneous   rents    

Interest  on  funded  debt 

Other    interest    

$133,881,409 

27,625,077 

28,811,031 

2.933,067 

349,092,709 

13,207,243 

5,355,416 

6.97 
1.44 
1.50 

.15 

18.17 

.69 

Sinking  and  redemption  funds 

.28 

Total    

$560,905,952 

29.20 

The  Postmaster-General's  plan,  however,  if  applied  to  all  railway 
traffic,  would  allow  the  railwa3's  to  receive  for  the  services  they  render 
only  the  amount  of  their  operating  expenses  and  taxes,  that  is 
$1,920,665,026,  plus  six  per  cent  of  that  amount  which  is  $115,239,922. 
Thus  instead  of  the  $560,905,952  absolutely  necessary,  as  has  been  seen, 
to  maintain  their  systems  and  keep  them  out  of  the  hands  of  receivers 
they  would  have  only  $115,239,923  or  20.55  per  cent,  about  one-fifth, 
of  the  necessary  amount.  Of  course  every  reasonable  person  realizes 
also  that  the  item  of  "dividends,"  as  well  as  most  of  the  other  items 
in  the  table  next  but  one  above,  is  a  necessary  item  and  must  be  met 
if  the  railways  are  to  be  fairly  treated,  if  they  are  to  be  protected  in 
their  Constitutional  right  to  receive  just  compensation  for  their  services 
and  if  they  are  to  be  enabled  to  render  proper  and  adequate  services  as 
common  carriers.  The  fact  that  the  Postmaster-General's  plan  could  not 
be  generally  applied  without  destructive  effect  should  deprive  it  of  any 
support  whatever.  There  is  nothing  in  the  character  of  the  mail 
traffic  which  suggests  that  it  ought  to  be  treated  exceptionally  or 
carried  for  so  low  a  figure  as  to  require  rates  on  other  transporta- 
tion to  be  kept  at  a  higher  level  in  order  to  prevent  the  insolvency 
of  the  carriers.  Such  treatment  would  make  the  mail  service  a  tax 
on  every  other  service  rendered  by  the  railways. 


F. 

EVEN  ON  THE  BASIS  OF  THE  UNFAIRLY  LOW  ESTIMATES 
OF  OPERATING  COSTS  MADE  BY  THE  POSTMASTER- 
GENERAL,  ALLOWANCE  FOR  THE  OMITTED  EX- 
PENSES WOULD  MAKE  THE  MAIL  PAY 
HIGHER  THAN  IT  IS  NOW. 

The  following  figures  are  deduced  from  those  contained  in  Table  T, 
Document  No.  105,  pages  280-281. 


42 


Railway  mail  pay  for  November,  1909 $3,607,773.13 

Operating  expenses  and  taxes,  same  month 2,676,503.75 

By  reference  to  page  41  of  this  statement,  it  will  be 
seen  that  the  gross  receipts  of  all  railways  for  the 
year  ended  June  30,  1910,  as  reported  by  the  Inter- 
state Commerce  Commission  were $3,005,112,836 

Deducting  therefrom — 

Operating  expenses  and  taxes $1,920,665,026 

Appropriations  to  Additions  and  Bet- 
terments and  for  new  lines  and 
extensions    55,061,675 

Credit  to  profit  and  loss 175,480.326  $2,151,207,027 

There  remains    $853,905,809 

:z=  44.45% 
which  must  be  provided  for  before  a  proper  return  on  investment 
shall  have  been  secured. 

If  you  add  to  the  operating  expenses  and  taxes,  as  shown  by  the 
Postmaster-General,  $2,676,503.75,  for  November,  1909,  44.45  per  cent 
or  $1,189,705.92  it  will  give  a  total  of  $3,866,209.67  or  $258,436.54 
(equivalent  to  $3,101,238.48  per  annum)  more  than  Document  No.  105 
shows  was  paid  for  mail  service  in  November,  1909,  and  consequently, 
even  on  the  basis  of  the  unfairly  low  estimates  of  operating  costs  made 
by  the  Postmaster-General,  an  allowance  for  the  omitted  expenses,  which 
must  be  met  would  make  the  railway  mail  pay  higher  than  it  is  at 
present. 

FIFTH. 

In  confining  his  investigation  to  the  month  of  Novemher,  the  Post- 
master-General selected  a  month  that  is  not  a  fair  average  or  typical 
portion  of  the  year  hut,  in  connection  with  the  methods  he  employed, 
greatly  reduced  the  apparent  cost  of  the  passenger  train  services,  result- 
ing from  his  calculations. 

•  There  can  be  no  contradiction  of  the  assertion  that,  if  in  every 
other  respect  the  basis  of  railway  pay  proposed  by  the  Postmaster- 
General  were  reasonable  and  fair,  the  validity  of  his  calculations  would 
depend  upon  whether  the  period  selected  for  his  investigation  could 
be  considered  fairly  typical  of  an  entire  year.  All  his  computations 
are  based  upon  data  obtained  by  him  which  represent  only  the  single 
month  of  November  in  the  year  1909.  If  that  month  was  a  rea- 
sonably typical  month,  particularly  with  respect  to  passenger  train 
traffic  and  expenses  calculations  based  upon  these  data  would  be  en- 
titled to  all  the  weight  which  the  methods  of  computation  employed 
would  warrant.  But,  however  accvirate  these  calculations  and  methods, 
the  results  could  rise  no  higher  than  their  source,  and  the  most  perfect 
system  of  computation  most  accurately  applied  would  be  wholly  viti- 
ated if  the  basic  data  cannot  be  regarded  as  fairly  typical  and  represen- 
tative.   If  the  month  of  November  varies  from  the  whole  period  of  the 

43 


year  from  which  it  was  selected,  and  particularly  if  the  differences  are 
such  as  unfairhj  io  diminisli  the  apparent  cost  of  the  passenger  train 
services,  results  based  only  on  data  for  that  month  must  he  incon- 
■clusive  and  worthless.    Now  this  is  precisehj  the  case. 

It  may  fairly  be  questioned  whether  the  year  contains  any 
single  month  that  could  be  properly  denominated  an  average, 
typical  or  representative  month  but  if  there  is  such  a  month  it 
is  certainly  not  the  month  of  November.  The  Interstate  Commerce 
Commission  has  puhlished  the  receipts  and  expenditures  of  the  railways 
of  the  United  States  for  each  month  of  the  fiscal  year  that  ended  witli 
June  30,  1910  and  includes  the  month  of  N"oyember,  1909,  and  these 
data  conclusively  prove  that  that  month  was  very  far  from  a  representa- 
tive one  and  that  the  seasonal  and  other  variations  to  wliich  it  was 
subject  were  such  as  to  render  the  results  of  any  calculations  based  upon 
it  exceedingly  imfair  to  the  passenger  train  services.*  The  figures  in 
the  second  and  fifth  columns  of  the  table  on  page  -to  are  from  that 
Imlletin,  the  figures  in  the  other  columns  have  been  derived  from  them. 

The  most  accurate  comparisons  permitted  by  the  data  on  page  45 
are  those  between  the  per  diem  averages  in  the  third  and  sixth  columns, 
as  such  comparisons  are  not  affected  by  the  varying  numbers  of  days  in 
the  different  months.  These  comparisons  show  that  the  average  gross 
receipts  per  mile  of  line  from  the  passenger  service  during  the  month 
■of  Xovember,  1909,  amounted  to  but  95. IT  per  cent  of  the  daily  average 
for  the  year  while  the  average  gross  receipts  from  freight  service 
amounted  to  113.07  per  cent  of  the  daily  average  for  the  year.  In  the 
whole  year  there  were  but  four  months  that  showed  smaller  gross  re- 
ceipts from  passengers  than  the  month  selected  by  the  Postmaster-Gen- 
eral while  there  was  but  one  month  in  the  entire  year  which  showed  as 
high  receipts  from  freight  service.  ]More  conclusive  still  is  the  fact, 
shown  by  the  last  column  in  the  table,  that  of  all  the  months  in  the 
year  the  percentage  of  gross  passenger  receipts  to  receipts  from  both 
passengers  and  freight  was  alisolutely  the  lowest  in  November.  In 
that  month  the  passenger  service  earned,  in  gross,  but  $21.51  in  each 
$100.00  of  receipts  from  both  the  passenger  and  freight  services  while 
the  average  for  the  year  was  $24.61  and  in  one  month  it  was  as  high 
as  $29.25.  It  is  perfectly  obvious  that  if  any  direct  charges  to  the 
different  services  are  warranted  the  amounts  of  the  accounts  so  charge- 
able must  fluctuate,  if  not  in  exact  proportion  to  the  respective  volume 
of  traffic  in  the  passenger  and  freight  services,  at  least  with  some  rela- 

*  Interstate  Commerce  Commission.  Bureau  of  Statistics  and  Accounts, 
Bulletin  of  Revenues  and  Expenses  of  Steam  Roads  in  the  United  States 
compiled  from  monthly  reports  coverinir  the  j-ears  ending  June  30,  1910 
and  1909. 

44 


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Gross  Receipts  per  mile  per  day 

Per  Cent  Deviation  From  Average 


ABOVE  AVERAGE     BELOW  AVERAGE 


JULYI90g 
AUGI909 
SEPT  1909 
OCT  1909 
NOV  1909 

DE  CJ909 
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FEB.  1910 
MARJ9I0 
APR1L1910 
MAY  1910 
JUNE1910 


Passenger 


I       I  Freight 


46 


tion  to  such  volume.  And  it  is  lui deniable  that  the  fluctuations  in 
average  gross  receipts  per  mile  of  line  roughly  measure  fluctuations  in 
volume  of  traffic.  Hence  it  is  plain  that  in  selecting  the  month  of 
November,  and  making  it  the  exclusive  basis  of  all  his  calculations 
and  estimates,  the  Postmaster-General  chose,  unwittingly  it  is  be- 
lieved, the  one  month  in  the  year  that,  if  the  balance  of  his  case 
were  sound,  would  appear  to  sustain  the  largest  possible  reduction 
in  railway  mail  pay  and  that  is  actually  the  most  unfavorable  to  the 
railways.  He  assigned  directly  $34.40  in  each  $100.00  of  operating 
expenses  and  every  apportionment  so  made  to  the  passenger  train  serv- 
ices was  diminished  by  the  selection  of  a  month  in  which  freight  move- 
ment is  much  heavier  and  passenger  movement  much  lower  than  the 
average  for  an  entire  year,  he  assigned  $36.00  in  each  $100.00  of  operat- 
ing expenses  in  the  proportions  of  the  accounts  he  had  charged  directly 
and  thus  extended  the  error  to  these  unlocated  or  joint  expenses,  he 
assigned  $13.60  in  each  $100.00  in  proportion  to  locomotive  mileage 
and  $9.80  in  each  $100.00  in  proportion  to  revenue  train  mileage  and 
as  these  apportionments  were  made  on  the  basis  of  a  month  in  which 
passenger  traffic  was  very  light  and  freight  traffic  very  heavy  these 
apportionments,  also,  were  unduly  to  the  disadvantage  of  the  passenger 
train  services.  And  these  apportionments  account  for  93.80  per  cent 
or  $93.80  in  each  $100.00  of  all  operating  expenses. 

In  the  wide  range  of  climatic  conditions  in  the  United  States 
it  happens  that  the  month  of  November  is,  throughout  a  large  section 
and  as  to  many  railways,  a  month  in  which  substantially  Winter  condi- 
tions prevail  and  characterized  by  much  more  than  the  average  difficulty 
of  operation.  Under  such  conditions  it  becomes  necessary  to  suspend 
certain  repairs,  renewals,  and  replacements,  which  entail  expenditures 
chargeable  to  the  operating  accounts  while  the  cost  of  moving  trains  is 
enhanced.    The  results  of  these  facts  are  shown  by  the  table  on  page  48. 

The  figures  in  the  table  on  page  48  fully  corroborate  the  conclusions 
inevitably  to  be  drawn  from  the  one  next  preceding.  Thus  it  appears 
that  while  the  average  daily  operating  expenses  of  November  are,  in 
the  aggregate,  a  little  higher  than  those  of  the  balance  of  the  year  their 
distribution  among  the  various  accounts  is  very  different  from  the  aver- 
age distribution.  The  maintenance  of  way  and  structures  expenses 
which  do  not  fluctuate  with  traffic  fluctuations  averaged  but  $4.13  per 
mile  of  line  per  day  during  the  period  selected  by  the  Postmaster- 
General  while  during  the  balance  of  the  year  these  expenses  averaged 
$4.30  per  mile  per  day.  But  expenses  for  other  purposes  averaged 
$1?.28  per  mile  per  day  during  the  former  period  and  only  $16.80 
during  the  latter.     These  differences  result  from  the  fact  that  the  severe 

47 


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Operating  Expenses 

per  mile  of  line  per    day 


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Transportation    Expense 


Maintenance  or  Equipment 


Maintenance  OF  Way  and 
Structure 


G 


ENERAL 


EXPE 


NSE 


Traffic    Expense 


I  NOVEMBER 

1  OTHER  II  MONTHS 


49 


weather  conditions  of  Xovember  render  necessary  the  suspension  of 
much  of  the  ordinary  maintenance  work  upon  road-bed  and  structures 
and,  at  the  same  time,  tend  to  enhance  the  operating  expenses  that  do 
fluctuate  with  the  volume  of  traffic.  Consequently,  as  all  the  traffic 
fluctuations  that  find  expression  in  Xovember  tend  to  diminish  the  total 
expense  apportioned,  by  the  Postmaster-General's  method,  to  the  pas- 
senger train  services,  the  fact  that  the  expenses  that  do  vary  with  traffic 
are  relatively  heavier  in  the  month  he  selected  had  a  further  and  strong 
tendency  to  reduce  the  apparent  cost  of  the  passenger  train  services  re- 
sulting from  his  computations.  It  follows,  as  surely  as  the  night  fol- 
lows the  day,  that,  if  every  other  feature  of  Document  No.  105 
were  utterly  beyond  criticism,  the  fact  that  it  rests  wholly  upon  the 
single  month  of  November  would  render  its  results  illusory,  mis- 
leading, and  grossly  unjust  to  the  railways. 

III. 
EECENT  EEDUCTIOXS  IX  RAILWAY  MAIL  PAY. 

A. 

PRELIMIXAEY  SUEVEY^  AXD  COMPAEISOXS. 

Xo  consideration  of  the  reduction  proposed  in  Document  Xo.  105 
would  be  adequate  which  did  not  make  appropriate  allowance  for  the 
fact  that  during  the  period  of  advancing  railway  expenses  subsequent  to 
June  30,  1907,  the  mail  revenues  of  the  railways  have  been  subjected  to 
repeated  and  drastic  decreases  brought  about  by  legislative  action  and 
b}'  administrative  orders. 

The  volume  of  the  American  mails,  the  revenue  of  the  Ameri- 
can postal  service  and  its  demands  upon  the  railways  for  services 
and  facilities  are  constantly  increasing.  The  costs  of  supplying 
railway  transportation  are  also  increasing.  Capital  costs  (interest) 
have  increased  through  the  higher  standards  of  service  demanded  and 
the  higher  value  of  real  estate  required  for  extended  and  necessary  ter- 
minal plants,  labor  costs  have  grown  by  means  of  repeated  advances 
in  the  rates  of  wages  paid  to  employees  in  every  grade,  other  operat- 
ing expenses  have  increased  as  prices  of  materials  and  supplies  have 
mounted  upward,  taxes  have  increased  with  the  growing  exactions 
of  State  and  local  governments  which  have  been  rapidly  augmenting 
their  expenditures  and  forcing  an  increasing  share  of  the  total  burden 
upon  railway  carriers  and  by  the  creation  of  an  entirely  new  Federal  cor- 
poration tax.  But  the  aggregate  railway  mail  pay  has  remained 
substantially  stationary  for  several  years  and  has  not  at  any  recent 
date  advanced  in  proportion  to  the  increased  facilities  and  services 
required,  the  increased  profit  on  the  use  of  these  facilities  and  serv- 
ices made  by  the  Post  Office  Department  or  the  increased  expense 

50 


to  the  railways.     The  pay  per  unit  of  service  rendered  has  been 

greatly  reduced.     The  table  on  page  53  shows  some  of  these  facts. 

Eeduced  to  percentages,  the  figures  in  the  table  on  page  53  show 
the  following  increases  for  the  last  ten,  five  and  two  years,  respectively : 


Item 


Ten  years 

1901  to 

1911 


Fi  ve  years 

1906  to 

1911 


Two  years 

1909  to 

1911 


Postal  i'eceij)ts.  ner  cent  increase 

113.09 

106.40 

32.56 

142.81 

41.65 

33.66 

7.73 

42.91 

16  86 

Postal  expenditures : 

All  DUTDOses,  ner  cent  increase 

7  92 

Railway  mail  pay,  per  cent  increase... 
All  other  expenditures,  per  cent  increase 

1.43 

9.81 

These  percentages  disclose  what  has  happened  too  plainly  to  ad- 
mit of  much  comment.  It  appears  that  for  either  tlie  ten  or  five- 
year  periods  just  closed  the  postal  expenses  exclusive  of  raihuay  mail 
pay  have  grown  much  more  rapidly  than  postal  business,  as  fairly 
measured  by  receipts,  ichile  railway  mail  pay  increased  during  the 
longer  period  less  than  one-fourth  as  fast  as  other  expenses  and  during 
the  five-year  period  less  than  one-fifth  as  fast.  The  two-year  period 
covered  by  the  percentages  in  the  last  column  covers  the  administration 
of  the  present  Postmaster-General  and,  although  during  that  period 
the  enormous  increase  in  postal  business  (amounting  to  $3-i,3 17,440 
in  revenue  or  nearly  one-third  as  much  as  the  entire  postal  receipts 
of  the  year  1901)  has  outstripped  the  growth  of  expenditures  and  the 
real  postal  deficit  has  been  greatly  reduced,  expenses  other  than  for 
railway  facilities  have  increased  9.81  per  cent  while  railway  mail  pay 
has  grown  but  1.43  per  cent,  or  about  one-seventh  as  rapidly  as  other 
expenditures  and  about  one-twelfth  as  rapidly  as  postal  receipts.*     The 

*  It  may,  of  course,  be  suggested  that  the  fact  that  nearly  the  whole 
recent  saving  in  expense  appears  to  be  in  railway  mail  pay  is  attributable 
to  the  increase  in  the  cost  of  rural  free  delivery  but  this  explanation  would 
be  inaccurate.  The  cost  of  rural  free  delivery  reported  by  the  Postmaster- 
General  for  the  fiscal  year  1909  was  $35,586,780;  for  1910,  $37,073,733, 
and  for  1911,  $37,145,757.  These  figures  give  a  percentage  increase  for 
the  two  years  of  the  present  administration  of  4.38  which  is  much  lower 
than  the  percentage  increase  of  all  expenses  other  than  railway  mail 
pay.  Excluding  the  reported  cost  of  rural  free  delivery  and  tlie  pay- 
ments for  railway  facilities  the  increase  in  all  other  postal  expenditures 
was  from  $135,547,947  in  1909  to  $150,778,789  in  1911  or  11.24  per  cent. 
Expenditures  for  rural  free  delivery  are  not,  however,  wholly  for  an 
additional  servic-e  as  might  superficially  be  conceived.  In  part,  they  repre- 
sent the  substitution  of  a  new  method  of  delivery  for  delivery  through  the 
post  offices,  which  has  permitted  a  decrease  in  the  number  of  post  offices 
and,  therefore,  the  expenses  which  would  have  been  necessary  to  maintain 
the  abandoned  offices  should  be  deducted  from  the  apparent  "cost  of  rural 
free  delivery  before  calculating  its  real  cost.  At  the  close  of  the  fiscal 
year  1901  there  were  76,945  post  offices  in  the  United  States;  at  the  cor- 
responding date  in  1906  there  were  65,600;  in  1909,  60,144  and  in  1911, 
59,237.  The  number  of  fourth-class  post  offices  in  1901  was  72,479;  in 
1906,  59,690;  in  1909,  52,944,  and  in  1911,  51,260.  From  1901  to  1911  the 
reduction  in  the  number  of  post  offices  of  all  classes  amounted  to  23.01 
per  cent  and  that  in  fourth-class  post  offices  to  29.28  per  cent. 


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52 


Postal  Receipts  and  Expenditures 


MILLIONS  OF  DOLLARS 

20  40  60  80  100  IgO  140  160  [BO  ^OO  2Z0  ^40 


I  Postal   Receipts  Postal  Expenditures 


Railway  MAIL  pay 


> 


LL   OTHER     EXPENSES 


53 


averages  in  the  table  under  discussion  are  even  more  significant  than 
the  affffre^rates.  Thev  shoAV  that  between  1901  and  1911  the  cost  of  the 
postal  service,  reported  by  the  Postmaster-General,  per  $100.00  of  re- 
ceipts therefrom,  declined  from  $103.51  to  $100.26  while  the  cost  for 
railway  mail  pay  declined  from  $34.18  to  $21.26  and  that  for  other 
purposes  increased  from  $69.33  to  $79.00.  That  is  to  say,  the  net 
decrease  of  $3.25  per  $100.00  of  revenue  is  the  difference  between  a 
saving  in  railway  mail  pay  of  $12.92  and  an  increase  in  other  expenses 
of  $9.67.  In  other  words,  not  only  is  the  whole  reduction  in  postal 
expenses  attributable  to  the  reductions  in  railway  mail  pay  but  an 
additional  reductioij  in  this  item  has  been  absorbed  by  increases  in 
other  items. 

Effective  illustrations  of  the  relation  of  railway  mail  pay  to  other 
postal  expenses  are  found  in  the  table  on  page  55  which  shows  the  an- 
nual increment  of  revenue  for  each  year  of  the  last  decade  and  the  cost 
per  $100.00  at  which  it  has  been  earned,  the  cost  of  railway  mail  pay 
and  the  expenses  for  other  purposes  being  stated  separately. 

The  table  on  page  55  shows  that  while  the  additional  cost  of  earning 
the  portion  of  total  postal  revenue  added  since  1901  has  been,  for  railway 
facilities  $9.8-4  per  $100.00  of  receipts  the  cost  for  other  purposes  has 
been  $87.55  per  $100.00  of  added  receipts.  Thus  the  revenue  added 
since  1901,  which  exceeds  the  entire  revenue  for  that  year,  has 
cost,  for  railway  mail  pay,  but  28.79  per  cent  of  the  average  of 
1901 ;  it  has  cost,  for  other  purposes,  126.28  per  cent  of  the  average 
at  the  beginning  of  the  period.  These  figures  give  additional  em- 
phasis to  the  conclusion  that  much  more  than  the  entire  decrease  in 
postal  expenses  has  been  taken  from  the  revenues  of  the  raihcays  which 
transport  the  mails.  The  fact  that  the  yearly  averages  show  that  each 
yearly  increment  of  postal  business  has  been  taken  up  at  a  cost,  for 
railway  facilities,  lower  than  the  average  cost  therefor  in  1901  while  in 
six  of  the  ten  3'ears  the  cost  for  other  purposes  has  exceeded  the  average 
of  1901,  in  one  year  being  more  than  three  and  one-half  times  that 
average,  is  most  significant.  These  data  again  demonstrate  the  truth 
of  the  assertion  that  for  a  decade  at  least  reductions  in  railway 
mail  pay  have  constituted  the  solitary  source  of  savings  in  postal 
expenditures. 

Looking  at  the  problem  from  the  point  of  view  of  railway  revenues 
it  is  not  surprising,  in  view  of  the  foregoing,  to  find  that  the  transporta- 
tion of  the  mails  constitutes  the  single  exception  to  the  rule  that  their 
gross  receipts  from  different  elements  of  traffic  have  increased,  albeit  not 
in  full  proportion  to  the  augmented  volume  of  work  they  have  done, 
at  least  with  some  rapidity.     Comparing  the  years  1909  and  1911,  and 

54 


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55 


omitting  express  receipts  for  which  official  figures  are  not  yet  available, 
the  figures  are  as  follows: 


Railway  receipts  from  : 

1909 

1911 

Increase, 
per  cent 

Freight^    

$1,677,614,678 

563.609.342 

49.869.375 

$1,929,335,457 

658,772,786 

50.583.123 

15  00 

Passenger^    

16.88 

Mail=    

143 

^  Data  compiled  by  Interstate  Commerce  Commission. 
*As  reported  by  the  Postmaster-General. 

During  the  two  years  covered  by  the  foregoing  the  receipts  of 
the  Post  Office  Department  increased,  as  already  shown,  16.86  per 
cent  and  the  operating  expenses  of  the  railways  of  the  United 
States  increased  from  $1,599,443,410  to  $1,935,511,581  or  21.01  per 
cent. 

The  successive  reports  of  the  Statistician  to  the  Interstate  Com- 
merce Commission  show  that  the  receipts  of  Interstate  railways  from 
freight,  passengers,  express  and  mail,  respectively,  have  been,  during 
each  year  from  1901  to  1911,  inclusive,  as  shown  on  page  57. 

That  the  relatively  slow  expansion  of  mail  receipts  shown  by 
these  tables  is  the  result  of  reductions  in  the  rates  of  pay  and  not 
of  a  slower  rate  of  growth  of  mail  business  is  apparent  from  the  fol- 
lowino- : 


Freiglit.  tons  carried  one  mile ; 

Number^    

Per  capita  of  population. 
Passengers  carried  one  mile ; 

Number^    

Per  capita  of  population 
Mail,        pieces        handled ; 

Per  capita  of  population. 


1901 


147,077,136,040 
1,895 

17,353,588,444 
224 
7.424.390,329- 
96 


1911 


255,016.910.451 
2,767 

32,338,496,329 
351 

16,900,552.138^ 
161 


Increase, 
per  cent 

73.39 
46.02 

86.35 

56.70 

127.64 

67.71 


*  Interstate    Commerce    Commission,    Twenty-third    Annual     (1910)     Re- 
port on  the  Statistics  of  Railways,  p.  58. 

'  Annual  Report  of  the  Postmaster-General  for  the  fiscal  year  1910,  p.  47. 
'  Statistics  published  by  the  Third  Assistant  Postmaster-General. 

Figures  showing  the  volume  of  express  business  in  1901  and  1911 
are  not  available  but  as  the  amounts  paid  to  the  railways  for  the 
facilities  with  which  they  furnish  the  express  companies  are  propor- 
tioned to  the  receipts  of  the  latter  it  may  be  concluded  that  the 
growth  in  the  railways'  revenues  from  express  at  least  roughly  meas- 
ures the  growth  of  this  traffic.  The  last  foregoing  table  shows  that 
of  the  three  services  included,  the  business  of  the  mails  has  grown 
with  far  the  greatest  rapidity,  yet  by  the  other  tables  it  has  been  shown 
that  the  railways'  revenues  from  mail  have  increased  most  slowly. 


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57 


A'arioiis  elements  have  combined  to  produce  this  decline  in  the 
mail  pay  of  the  railways,  but  in  this  statement  reference  will  be  made 
only  to  the  more  important  reductions  that  have  taken  place  within 
the  past  five  years.    These  are: 

First.  The  natural  operation  of  the  law  of  1873  by  which 
the  basis  of  mail  pay  is  fixed, 

Second.  The  action  of  the  Post  Office  Department  in 
stimulating  competition  for  mail  where  its  power  to  divert  part 
of  the  movement  from  any  route  or  routes  could  be  exercised 
for  that  purpose. 

Third.  The  statutory  reductions  provided  for  in  the  Ap- 
propriation Act  of  March  2,  1907, 

Fourth.  The  reduction  accomplished  by  including  Sundays 
in  the  divisor  used  to  establish  the  average  daily  weight  of  the 
mails,  in  accordance  with  the  executive  order  known  as  Post- 
master-General's Order  No.  412  of  June  7,  1907, 

Fifth,  The  withdrawal  of  all  payments  for  special  facilities, 
and, 

Sixth.  The  withdrawal  from  the  mails  of  stamped  en- 
velopes, postal  cards,  mail  bags  and  postal  equipment.  ' 


B. 

REDUCTIONS    DUE    TO    XATURAL    OPERATION    OF    THE 

LAW  OF  1873. 

Pay  for  the  services  and  facilities  supplied  by  railways  is  now 
fixed  by  the  law  of  March  3,  18^3  (17  Stat.  558)  subject  to  the 
deductions  provided  for  by  the  Acts  of  July  12,  1876  (19  Stat.  78) 
June  17,  1878  (20  Stat.  140)  March  2,  1907  (34  Stat.  1212)  and 
May  12,  1910  (36  Stat.  362).  The  Act  of  1876  effected  a  reduction 
to  ninety  per  cent  of  the  sums  that  would  have  been  paid  under 
the  unmodified  statute  of  1873  and  the  Act  of  1878  made  a  further 
reduction  of  five  per  cent.  The  reduction  effected  by  the  Act  of 
1907,  as  modified  by  that  of  1910,  will  be  discussed  in  a  subsequent 
paragraph.  The  constant  reduction  due  to  the  normal  operation  of 
the  law  from  1873  to  1898  was  shown  as  one  of  the  results  of  the  in- 
vestigations undertaken  for  the  Joint  Postal  Commission  by  Professor 
Henry  C.  Adams.  The  figures  showing  ton-mile  rates  in  the  following 
table  are  from  his  report.* 

*  Fifty-sixth  Congress,  Senate  Document  No.  89,  Part  2,  p.  253. 

58 


Year 


Railway  Mail  Pay 
per  ton  per  mile 


In 

cents 


Per  cent 
of  rate 
in  1873 


Year 


Railway  Mail  Pay 
per  ton  per  mile 


In 
cents 


Per  cent 
of  rate 
in  1873 


Year 


Railway  Mail  Pay 
per  ton  per  mile 


In 
cents 


Per  cent 
of  rate 
in  1873 


3873. 
1874. 
1875 . 
187<i. 
1877. 
1878. 
1879. 
1880. 
1881. 


2P..420 
23.732 
23.866 
23.979 
23.960 
23.167 
21.522 
20.596 
18.969 


100 
90 
90 
91 
91 
88 
81 
78 
72 


1882 

17.866 

68 

1891 

14.787 

1883 

17.828 

67 

1892 

14.453 

1884 

17.670 

67 

1893 

13.973 

1885 

17.182 

65 

1894 

13.323 

1886 

16.487 

62 

1895 

13.109 

1887 

16.567 

63 

1896 

12.964 

1888 

16.268 

62 

1897 

12.665 

1889 

15.656 

59 

1898 

12.567 

1890 

14.968 

57 

.... 

56 
55 
53 
50 
50 
49 
48 
48 


Considerably  less  than  one-third  of  the  reduction  of  fifty-two  per 
cent  shown  in  the  foregoing  table  is  to  be  attributed  to  the  statutory 
changes  of  1876  and  1878,  the  entire  balance  is  attributable  to  the  nat- 
ural operation  of  the  law.  From  1879  to  1898,  nineteen  years,  during 
which  there  were  no  changes  in  the  law,  the  average  rate  per  ton 
per  mile  declined  from  21.522  cents  to  12.567  cents  or  41.61  per  cent. 
This  diminishing  effect  of  the  law  of  1873  upon  the  rates  of  railway 
mail  pay  is  due  to  the  fact  that  it  fixes  the  rates  on  a  sliding  scale 
by  Avhich  they  automatically  decrease  as  the  volume  of  the  mail  increases 
and  so,  on  every  route,  constantly  approach  toward  the  statutory  min- 
imum. The  Post  Office  Department  has  unfortunately  failed  to  con- 
tinue the  tabulations  showing  the  rates  paid  per  ton  per  mile  for  rail- 
way mail  facilities,  begun  by  the  Joint  Postal  Commission,  and  it  may 
still  be  said,  as  Avas  said  by  Professor  Adams  in  1900: 

"The  Post  Office  Department  has  been  at  considerable  ex- 
pense and  trouble  to  determine  the  aggregate  tonnage  of  mail 
matter,  but  has  never  thought  it  of  advantage  to  compute  the  ton 
mileage  of  mail  carried.  This  is  a  little  strange,  because  not 
only  is  ton  mileage  the  only  true  measure  of  traffic,  but  it  is 
the  unit  of  traffic  made  the  basis  of  compensation  under  the 
law  of  1873."  Professor  Henry  C.  Adams,  Report  to  the  Johit 
Postal  Commission,  Fifty-sixth  Congress,  Senate  Document  ISTo. 
89,  Part  2,  p.  208. 

Although  statistics  measuring  the  reduction  since  1898,  due  to  this 
automatic  action  of  the  law  fixing  railway  mail  pay,  do  not  exist,  there 
can  be  no  intelligent  denial  of  the  fact  that  the  law  still  operates  and 
Avill  continue,  as  long  as  it  stands  unrepealed,  to  operate  in  this  way. 
Had  there  been  no  other  changes  its  operation  would  undoubtedly  have 
produced  a  material  reduction  in  the  average  rate  of  payment  per  ton 
per  mile  from  1898  to  the  present  time  and  such  a  reduction  has  actually 
taken  place  and  is  a  part  of  the  notable  decline  already  evidenced 
herein. 


59 


EFFECT  OF  COMPETITION  STIMULATED  BY  POST  OFFICE 

DEPAETMENT. 

Although  the  rates  of  pay  fixed  by  the  present  law  are  in  many 
instances  far  below  the  level  of  just  compensation  and  there  are  few, 
if  any,  separate  routes  on  which  they  are  fully  remunerative  the 
method  of  calculation  provided  in  the  statute  so  operates  that  wher- 
ever a  railway  mail  route  exists  and  carries  any  mail  it  becomes 
desirable  for  the  railway  operating  it,  from  the  point  of  view  of  its 
mail  revenue,  to  secure  for  that  route  the  greatest  possible  volume 
of  mail.  During  recent  years  the  Post  Office  Department  has  seized 
upon  the  potential  advantage  springing  from  this  condition  and  has 
pressed  it  vigorously  and  effectively  in  its  negotiations  with  the  rail- 
ways. The  existence  and  nature  of  this  advantage  were  concisely 
stated  by/ Postmaster-General  von  Meyer  in  his  annual  report  for  the 
year  1907,  as  follows : 

"Where  through  mails  are  concerned,  the  Department  often 
has  the  choice  of  competing  routes.  A  competing  route  may 
be  shorter  than  another,  it  may  be  more  economical  by  reason 
of  being  a  land-grant  route,  or  it  may  perform  important  ter- 
minal or  transfer  functions  which  must  otherwise  be  provided 

for  by  the  Department Where  the  Department  has 

the  opjDortunity  of  dispatching  mails  by  competing  routes,  one 
of  which  is  shorter  or  otherwise  less  expensive  than  the  other, 
it  appears  to  be  but  just  to  the  Government,  when  such  mails 
are  allowed  to  remain  with  the  longer  or  more  expensive  route, 
to  reduce  the  compensation  paid  therefor  by  the  amount  which 
the  Government  would  save  if  the  mails  in  question  were  dis- 
patched by  the  shorter  or  less  expensive  route. 

"Accordingh'  the  policy  has  been  inaugurated  of  effecting 
such  a  saving  in  cases  of  this  character  arising  at  the  beginning 
of  a  contract  term,  and  has  been  applied  in  some  prominent 
instances  in  the  readjustments  in  the  third  contract  section."' 
Postmaster-General's  Annual  Eeport  for  190T,  p.  2-i. 

This  policy,  to  which  no  exception  is  here  taken,  has  been  continued 
and  the  extent  in  which  it  has  been  effective,  up  to  the  present  time,  in 
reducing  railway  mail  pay  may  be  traced,  at  least  in  part,  in  the  suc- 
cessive annual  reports  of  the  Department.  The  annual  reports  of  the 
Second  Assistant  Postmaster-General  for  1908,  1909,  1910  and  1911 
contain  figures  which  show  that  the  reduction  in  annual  railway  mail 
pay  accomplished  by  this  means  amounts,  at  present,  to  not  less  than 

60 


$174,544.51.*     It  is  not  probable  that  this  policy  of  the  Department 
will  be  abandoned  or  that  its  possibilities  have  been  wholly  exhausted. 

D. 

EEDUCTIONS  MADE  BY  THE  ACT  OF  MARCH  2,  1907. 

The  postal  appropriation  act  of  March   2,   1907  provided  for  a 
reduction,  beginning  with  July  1,   1907,  of  five  per  cent  in  the  pay 
for  all  railway  routes  on  which  the  average  daily  weight  ascertained  at 
the  weighing  period  was  over  five  thousand  and  not  to  exceed  forty- 
eight  thousand  pounds  and  on  the  excess  over  five  thousand  pounds  up 
to  forty-eight  thousand  pounds  on  routes  having  more  than  forty-eight 
thousand  pounds  average  daily  weight.  For  the  excess  over  forty-eight 
thousand  pounds  the  Act  provided  that  land  grant  roads  should  be  paid 
at  the  rate  of  $17.10  per  mile  for  each  two  thousand  pounds  of  such 
excess  and  other  roads  at  the  rate  of  $19.24  per  mile.    By  a  subsequent 
act  (approved  May  12,  1910,  36  Stat.  362)  the  rate  of  $17.10  for  land 
grant  roads,  was  further  reduced,  the  reduction  to  take  effect  on  July 
1,  1910,  to  $15.39  for  each  two  thousand  pounds  in  excess  of  forty-eight 
thousand  pounds.     The  rates  thus  specified  are  ninety  per  cent  of  those 
previously  in  force  and  hence  the  reduction  on  this  portion  of  the  weight 
carried  on  the  heavy  routes  was  at  the  rate  of  ten  per  cent.     The  Act 
of  March  2,  1907  also  reduced  the  rates  of  payment  per  mile  per  annum 
for  postal  cars  forty-five  feet  long  or  longer  (cars  or  compartments  less 
than  forty  feet  long  are  not  paid  for)  as  follows: 


Length  of  car 


Former 
rate 


Reduced 
rate 


Reduction, 
per  cent 


Forty-five  feet    

Fifty  feet  

Fifty-five  feet  or  longer. 


$30.00 
40.00 
50.00 


$27.50 
32.50 
40.00 


8.33 
18.75 
20.00 


The  Post  Office  Department  has  stated  the  annual  amount  of 
these  reductions,  not  including  the  change  made  by  the  amendment 
of  May  12,  1910  affecting  the  land-grant  routes,  and  on  the  basis 
of  the  weighings  of  the  years  1904-1907,  inclusive,  as  follows  :■ 


Weighing  section 


Reduction  in  pay 

computed  on 
weight  of  mails. 


Reduction  in  pay 

for 

postal  cars- 


Total 
reduction 


First    

Second    

Third    

$547,909.01 

70,192.45 

759,145.88 

363,247.29 

$239,670.49 

85.196.86 

442.755.76 

168,350.98 

$787,579.50 
1.55.389.31 

1,201,901.64 
531,598.27 

Fourtli    

Total    

$1,740,494.63 

$935,974.09 

$2,676,468.72 

*  For  all  the  information  on  this  subject  that  has  been  made  public  see 
the  Annual  Reports  of  the  Second  Assistant  Postmaster-General  as  follows : 
1907,  p.  143;  1908,  p.  156;  1909,  p.  141;  1910,  p.  131;  1911  (pamphlet  print), 
pp.  9-11. 

t  Annual  Report  of  the  Second  Assistant  Postmaster-General  for  1907, 
p.  140;  same  for  1908,  p.  154. 


61 


Doubtless  the  foregoing  figures  are  smaller,  as  to  each  section 
and  as  to  the  aggregate,  than  those  which  would  represent  the  effect  of 
the  same  law  calculated  upon  the  weighings  of  the  years  1908-1911 
and  representing  the  rates  of  payment  now  in  force,  but  the  Post 
Office  Department  has  either  failed  to  make  these  calculations  or  has 
seen  fit  not  to  make  their  results  public.  It  has  stated,  however,  that 
the  amendment  of  May  12.  1910  to  the  Act  of  March  2,  190T,  when 
applied  to  the  weighings  in  force  on  July  1,  1910,  when  it  became 
effective,  resulted  in  a  further  reduction  of  $47,190. 18.f  Adding. the 
last  named  sum  to  the  total  of  $1,740,494.63  representing  the  reduc- 
tion in  transportation  pay,  as  distinguished  from  pay  for  railway  post 
office  cars,  shown  in  the  table  gives  $1,787,684.81  which,  in  the  ab- 
sence of  later  and  more  complete  information,  and  with  the  observation 
that  it  is  unquestionably  too  low,  must  be  accepted  as  the  nearest  ap- 
proximation of  the  actual  reduction  in  transportation  pay,  alone,  effected 
by  the  Act  of  March  2,  1907  as  amended  on  May  12,  1910,  which 
has  the  sanction  of  officially  published  figures.  Eailway  mail  pay  for 
transportation,  in  1911,  was  fixed,  subject  to  certain  deductions,  at  the 
annual  rate  of  $46,172,472.93.  The  reduction  of  $1,787,684.81,  now 
under  consideration,  amounted  therefore  to  3.87  per  cent  of  the  annual 
rate  of  pay  computed  on  average  daily  weight  of  the  mails.  The  annual 
rate  of  pay  for  postal  cars,  at  the  close  of  the  fiscal  year  1911,  was 
$4,737,788.75  and  on  this  basis  the  Department's  statement  of  the  re- 
duction in  postal  car  pay,  $935,974.09,  amounts  to  19.76  per  cent. 

E. 

EEDUCTION"  BY  ADMIXISTEATIVE  ORDER. 

It  is  well  known  that  the  reduction  imposed  by  the  Act  of 
March  2,  1907  was  adopted  as  a  substitute  for  the  reduction  which 
would  have  resulted  had  Congress,  by  its  statutory  enactment,  re- 
quired the  whole  number  of  days  of  the  weighing  period  (including 
Sundays),  instead  of  the  number  of  week-days  or  "working  days" 
in  that  period,  to  be  used  as  the  divisor  in  determining  the  aver- 
age daily  weight  fixing  the  basis  of  payment  for  each  railway  route. 
Both  proposals  were  submitted  to  Congress,  both  were  fully  con- 
sidered and  throughout  this  consideration  they  were  regarded  as 
alternatives,  it  was  never  by  any  one  contemplated  or  suggested 
that  more  than  one  of  them  should  be  adopted.  After  full  considera- 
tion Congress  adopted  the  former  alternative  and  rejected  the  latter. 
ISTotwithstanding  this  decision  of  Congress,  the  Postmaster-General  then 
in  office,  on  the  very  day  that  the  alternative  reduction  received  the 
signature  of  the  President,  that  is  to  say  on  March  2,  1907,  but  not 

t  Annual   Report  of  the   Second  Assistant   Postmaster-General   for   1910. 
p.  131. 

62 


until   the   legislative  act   had  passed  beyond   the   control   of   Congress, 
entered  an  order,  known  as  "Order  Xo.  165,"  which  read  as  follows : 

"That  when  the  weight  of  mail  is  taken  on  railroad  routes, 
the  whole  number  of  days  the  mails  are  weighed  shall  be  used 
as  a  divisor  for  obtaining  the  average  weight  per  day." 

Three  months  later,  another  Postmaster-General  having  come  into 
office,  the  foregoing  was  rescinded  and  the  following  substituted: 

"That  when  the  weight  of  mail  is  taken  on  railroad  routes 
the  whole  number  of  days  included  in  the  weighing  period  shall 
be  used  as  a  divisor  for  obtaining  the  average  weight  per  day." 

Explaining  his  action  in  substituting  Order  'No.  412  for  Order 
No.  165,  Postmaster-General  Meyer  said  of  the  earlier  order: 

"Its  enforcement  according  to  its  terms  would  have  worked 
an  injustice  to  those  mail  routes  which  afford  the  most  efficient 
service;  that  is  to  say,  those  lines  Avhich  carry  the  mails  seven 
days  in  every  week  would  receive  less  compensation  for  trans- 
porting the  same  amount  of  mail  than  would  those  which  give 
a  service  of  only  six  days  in  each  week.  In  order  to  correct 
this  defect,  I  issued  Order  No.  412,  dated  June  7,  1907,  .  .  ." 
Postmaster-General's  Annual  Eeport  for  1907,  p.  28. 

The  difference  between  Order  No.  165  and  Order  No.  412  is  that 
the  former  would  have  reduced  the  mail  pay  of  those  routes  only 
which  had  seven-day  service  while  the  latter  reduces  the  pay  of  all 
routes  whether  they  have  service  seven  days  per  week,  or  six  days,  or 
a  still  smaller  number  of  days  each  week.  It  is  a  little  difficult  to 
comprehend  how  an  injustice  to  some  routes  arising  from  a  reduction 
in  their  pay  could  be  remedied  by  reducing  the  pay  on  some  other 
routes  and  the  difficulty  is  enhanced  when  it  is  realized  that  in  many 
cases  both  seven-day  and  six-day  (or  less)  routes  are  operated  by  the 
same  railways  and  the  pay  for  facilities  on  those  of  both  classes  goes, 
in  effect,  into  the  same  pocket. 

This  is  not  the  place  in  which  to  discuss  the  propriety,  the  legality 
or  the  wisdom  of  the  change  effected  in  1907  by  executive 'order  but 
attention  may  properly  be  directed  at  this  time  to  the  indisputable  fact 
that,  had  Congress  been  advised  of  the  purpose  of  the  Postmaster- 
General  to  issue  an  order  increasing  the  number  of  days  taken  as  the 
divisor,  the  statutory  reductions  of  ^larch  2,  1907  would  not  have  been 
adopted. 

But,  reversing  the  declared  purpose  of  Congress,  the  administrative 
order  changing  the  divisor  was  issued  and  has  been  enforced  and  this 


*t)^"0 


63 


report  is  concerned  with  it  no  further,  at  present,  than  to  ascertain,  as 
nearly  as  may  be,  how  much  it  has  reduced  the  mail  revenues  of  the 
railways.  The  following  official  estimates  are  from  the  Annual  Report 
of  the  Second  Assistant  Postmaster-General  for  the  year  1910 : 


Weighing  section 


Date  Order  No. 

412  became 

effective 


Reduction  in 

annual  rate 

of  pay 


First    . 
Second 
Third 
Fourth 


1909,  July  1 
1908,  July  1 
1907,  July  1 

1910,  July  1 


$1,100,951.44 

434,730.82 

1,787,378.10 

1,618,879.98 


Total 


$4,941,940.34 


There  has  been  a  later  weighing  than  that  represented  above  in 
one  section,  the  third,  and  it  is  prohahle  that,  as  the  normal  increase 
in  weights  from  weighing  to  weighing  tends  to  increase  the  amount 
representing  any  such  change,  the  figures  as  to  that  section  are,  at 
present,  somewhat  too  low,  but  data  for  their  correction  are  not  avail- 
able. 

Thus  both,  instead  of  one,  of  these  heavy  reductions  were  made, 
and  instead  of  the  Congressional  determination  to  reduce  the  railway  pay 
only  $2,723,658.90,  as  compared  with  $4,941,940.34,  had  the  effect  of 
combining  both  and  reducing  the  pay  $7,665,599.24  or  nearly  three 
times  the  amount  which  Congress  determined  was  an  adequate  reduc- 
tion, or  based  upon  the  total  of  transportation  and  railway  post  office 
car  pay  for  1911,  $50,099,537.02,  15.30  per  cent. 


WITHDRAWAL  OF  PAYMENTS  FOR  SPECIAL  FACILITIES. 

From  a  date  soon  after  the  ten  per  cent  statutory  reduction  in 
the  rates  of  mail  pay  effected  by  the  Act  of  July  12,  1876  (19  Stat. 
78),  the  Post  Office  Department,  under  authority  obtained  from  Con- 
gress, instituted  a  system  of  special  additional  payments  for  exttra 
or  expedited  train  service  upon  railway  routes  on  which  the  statutory 
payments  would  have  been  insufficient  to  secure  the  quality  of  service 
regarded  as  desirable  by  the  Postmaster-General.  By  the  year  1901 
the  number  of  routes  to  which  extra  payments  of  this  character  were 
accorded,  as  well  as  the  annual  sum  so  expended,  had  been  considerably 
reduced  and  on  July  1,  1907,  the  last  of  these  allowances  was  dis- 
continued. The  additional  facilities  and  expedited  services  obtained  in 
consideration  of  these  payments  have  not,  however,  been  withdrawn  or 
diminished.  The  annual  rates  of  payment  of  this  character  for  the 
fiscal  years  1901  to  1907,  inclusive,  were  as  follows: 


64 


Fiscal  year 


Annual  rate  of  pay  for  special 
railway  facilities 


1901 . 
1902. 
1903. 
1904. 
1905. 
1906. 
1907. 


$195,682.50 
195,636.25 
167.175.00 
167.175.00 
167.175.00 
167.005.00 
167.005.00 


The  rate  for  1907  will  be  accepted,  for  the  purposes  of  this  report, 
as  measuring  the  present  reduction  due  to  the  cessation  of  these  pay- 
ments. 

G. 

WITHDRAWAL  OF  ENVELOPES,  POSTAL  CARDS  AND  MAIL 
'  EQUIPMENT  FROM  MAILS. 

Congress  has,  by  legislation  on  successive  appropriation  acts,  pro- 
vided the  Postmaster-General  with  funds  for  the  payment  of  freight 
or  express  charges  on  postal  cards,  stamped  envelopes,  newspaper  wrap- 
pers, empty  mail  bags,  furniture,  equipment  and  other  mail  supplies 
for  the  postal  service,  except  postage  stamps,  and  has  directed  the 
withdrawal  of  such  articles  from  the  mails,  wherever  practicable,  dur- 
ing and  after  the  weighing  period.  This  withdrawal  has,  of  course, 
decreased  the  weight  at  the  successive  weighing  periods  and  therefore, 
diminished  the  pay  for  mail  transportation.  It  was  completed  for  the 
whole  country  with  the  weighing  in  1910  in  the  fourth  weighing  sec- 
tion.* Unlike  all  the  other  reductions  herein  referred  to  this  one 
does  involve  a  reduction  in  service  as  well  as  in  payments.  The  Second 
Assistant  Postmaster-General  has  stated  that  it  is  impossible  accurately 
to  estimate  the  reduction  in  railway  mail  pay  due  to  these  withdrawalsf 
and  for  the  purposes  of  this  brief  there  will  be  substituted  for  such 
an  estimate  the  sum  which  the  Department  has  asked  to  have  appropri- 
ated to  pay,  during  the  fiscal  year  1913,  freight  and  expressage  on  the 
articles  so  withdraAvn.  This  sum  is  $525,000. 00|  and  to  use  it  is  to 
place  the  reduction  at  the  lowesi  conceivable  minimum. 


H. 

FORWARDING  PERIODICALS  BY  FREIGHT. 

Incidentally,  mention  may  be  made  of  the  recent  action  of  the  Post- 
master-General in  withdrawing  certain  periodicals  from  the  mails  and 

*  Annual  Report  of  the   Second  Assistant   Postmaster-General    for    1910, 
p.  145. 

t  Annual  Report  for  1910,  p.  130. 

j  Annual  Report  of  the  Second  Assistant  Postmaster-General  for  1911,  p.  0. 

65 


substituting  freight  service  for  that  formerly  given  on  passenger  trains.* 
This  action  has  resulted  in  a  large  reduction  in  gross  revenue  to  the 
railway's  with  little  or  no  opportunity  for  reduction  in  the  cost  of  their 
operations. 


SUMMARY  OF  RECENT  REDUCTIOXS. 

This  report  has  now  reached  the  point  at  which  a  summary  of  the 
recent  reductions  should  be  presented.  Xo  attempt  has  been  made  or 
will  be  made  to  estimate  in  dollars  and  cents  the  effect  of  the  natural 
decrease  of  the  rate  per  ton  per  mile  for  the  services  rendered  which, 
as  has  been  shown,  must  result  from  the  normal  operation  of  the 
system  of  payment  inaugurated  by  the  law  of  1873.  Approximations 
of  the  effect  of  the  other  changes,  all  of  them  doubtless  too  low,  have 
been  given  and  are  repeated,  as  f ollow> : 


Cause  of  reduction 


Amount  of 
reduction 


Natural  operation  of  Law  of  187.3 No  estimate. 

Competition  stimulated  by  Post  Office  Department 8174,544.51 

Act  of  March  2,  1907,  and  amendment  of  May  12.  1910 2,723,658.90 

Postmaster-General's  Divisor  Order 4,941.940..34 

Withdrawal  of  pay  for  special  facilities j           167.005.00 

Withdrawal  of  mail  supplies  from  mails '           525.000.00 

Total   (with  no  allowance  for  the  first  item  above)...  $8,532,148.75 


Therefore,  with  no  allowance  for  the  natural  downward  tendency, 
due  to  the  sliding  scale  of  pa}Tnent  so  wisely  provided  for  in  1873, 
the  mail  pay  of  the  railways  in  1911  was  at  least  $8,532,148.70  less  than 
it  would  have  been  under  the  laws  and  practices  in  vogue  prior  to  1907. 
Compared  with  transportation  pay  of  $46,172,472.93  this  reduction 
amounts  to  18.48  per  cent  and  on  the  basis  of  $50,099,537.02,  the  sum 
which  includes  both  the  transportation  pay  and  railway  post  office  car 
pay  of  1911,  it  amounts  to  17.03  per  cent. 

A  method  of  estimating  the  contribution  of  the  railways  to  the 
reduction  of  the  postal  deficit,  which  is  at  once  more  simple  and  more 
comprehensive  and  more  adequate  is  by  ascertaining  what  the  railway 
mail  pay  of  1911  would  have  been  had  it  continued  to  absorb,  as  it 
did  in  1901,  that  is  but  ten  years  earlier,  $34.18  per  $100.00  of 
postal  receipts  (see  table  on  page  52).  Postal  receipts  in  1901 
aggregated  $237,879,823  and,  as  already  shown,  even  with  the  enor- 
mous increase  in  business  of  the  decade  1901-1911,  expenses  for  oth'-r 

*  This  change  is  described  by  the  Postmaster-General  in  his  Report  for 
1911  (House  Document  No.  559,  Sixty -second  Congress,  p.  19)  and.  more 
fully  by  the  Second  Assistant  Postmaster-General  on  pages  21  to  23  of  his 
Annual  Report  for  the  same  year. 

66 


purposes  than  raih\ay  mail  pay  increased  proportionately  faster  than 
receipts,  so  that  in  1911  these  expenses  consumed  $79.00  for  each 
$100.00  of  receipts  as  against  but  $69.33  in  1901.  Fortunately,  for  the 
Post  Office  Department  railway  mail  pay  moved  in  the  opposite  direction. 
Had  it  merely  remained  stationary,  in  its  relation  to  receipts,  the 
mail  pay  of  1911  would  have  been  $81,307,323  or  $30,724,200  more 
than  it  actually  was.  The  postal  deficit  never  amounted  to  more 
than  twenty-one  or  twenty-two  millions  and  the  Post  Office  De- 
partment never  admitted  as  much  as  eighteen  millions. 

The  table  next  to  follow  merits  more  than  ordinary  attention. 
It  serves,  at  once,  to  illustrate  with  marked  clearness  (first)  the  re- 
ductions in  railway  mail  pay,  exclusive  of  payments  on  account  of 
postal  cars,  due  to  (a)  the  change  in  the  divisor  and  (b)  the  statu- 
tory reductions  of  March  2,  1907,  and  May  12,  1910,  and  (second) 
the  reductions  which,  without  any  changes  in  the  law  or  in  the  method 
of  its  application,  result  from  the  progressively  decreasing  sliding  scale 
of  payment.  This  natural  downward  movement  is  illustrated  both 
with  reference  to  the  old  divisor  and  rates  and  with  regard  to  the 
rates  and  the  divisor  now  in  force.  In  considering  the  table  it  is 
necessary  to  remember  that  ^the  principle  of  adjustment  crystallized 
in  the  law  of  1873  has  never  been  modified  although  the  rates  have 
been  several  times  reduced,  the  application  of  the  sliding  scale  of  pay- 
ment has  been  extended  and  the  method  of  applying  the  law  has  been 
changed  so  as  to  j)roduce  a  further  reduction.  This  principle  of 
progressive  reduction  with  augmented  volume  of  service  was  applied 
at  the  outset,  and  is  still  applied,  by  means  of  naming  a  series  of 
specific  rates  for  a  series  of  specific  services,  each  successive  rate  show- 
ing a  lower  average  per  unit  of  service  than  the  rate  named  for  the 
next  lower  volume  of  service  that  is  specified.  After  the  maximum 
service  so  specified  is  attained  the  law  further  specifies  a  still  lower 
rate  to  be  applied  to  each  additional  two  thousand  pounds  in  the 
average  weight  carried  daily  over  the  entire  route.  It  is  obvious  that 
under  this  plan  increasing  service  produces  a  progressive  lowering  of 
the  average  rate  and  that  the  limit  of  this  downward  movement  is 
fixed  by  the  rate  applied  to  the  final  increment.  Originally  this  final 
rate  was  applied  to  each,  two  thousand  pounds  in  excess  of  five  thou- 
sand pounds  of  average  daily  weight  but  since  July  1,  1907,  under 
the  law  of  March  2,  of  that  year,  a  further  reduction  has  been  applied  to 
the  excess  over  forty-eight  thousand  pounds  of  daily  weight.  Begin- 
ning in  1876  (Act  of  July  12,  1876),  routes  or  parts  of  routes,  the 
construction  of  which  was  aided  by  Congressional  grants  of  land, 
have  received  but  eighty  per  cent  of  the  amounts  paid  for  the  same 
services  when  rendered  by  other  routes.     Prior  to  July   1,   1907,   the 

67 


rate  for  each  two  thousand  pounds  in  excess  of  five  thousand  pounds 
was  $'il.37  per  mile  per  annum,  or  6.827  cents  per  ton  per  mile  for 
other  than  land-grant  routes  and  $17.10  per  mile  per  annum  or  5.463 
cents  per  ton  per  mile  for  land-grant  routes.  The  present  rates  on 
the  excess  over  five  thousand  pounds,  up  to  a  total  of  forty-eight 
thousand  pounds,  are  five  per  cent  lower,  that  is  to  say,  $20.30  per 
mile  per  annum  or  5.562  cents  per  ton  per  mile  for  other  than  land- 
grant  routes  or  $16.24  per  mile  per  annum  or  4.451  per  ton  per 
mile  for  land-grant  routes.  Beyond  forty-eight  thousand  pounds  the 
Act  of  March  2,  1907,  now  in  force,  provides  rates  of  $19.24  per  mile 
per  annum  or  5.271  cents  per  ton  per  mile  for  each  increment  of  two 
thousand  pounds  for  other  than  land-grant  routes  and,  as  modified 
by  the  amendment  of  May  12,  1910,  $15.39  per  mile  per  annum  oi 
4.216  ceiits  per  ton  per  mile  for  land-grant  routes.  In  calculating 
the  averages  per  ton  per  mile  stated  in  this  paragraph  proper  allow- 
ance has  been  made  for  the  fact  that  under  the  Postmaster-General's 
Order  No.  412,  the  divisor  order,  a  route  has  annually  to  carry  an 
average  of  365  tons  per  mile  of  its  length  to  obtain  an  average  daily 
weight  of  two  thousand  pounds  while  prior  to  1907  the  same  average 
daily  weight  represented  an  average  annual  service  of  313  tons  per 
mile  of  route.  The  reduction  thus  apj^lied  to  the  excess  over  forty- 
eight  thousand  pounds  average  daily  weight,  as  indicated  by  these 
average  rates  per  ton  per  mile,  amounts  to  22.79  per  cent  for  other 
than  land-grant  routes   and  to   22.83   per  cent  for  land-grant  routes. 

An  important  consequence  of  this  scheme  of  payment  is  that,  of 
itself,  it  should  enable  the  Post  Office  Department  to  show  a  decreasing 
ratio  of  exj)enses  to  receipts  resulting  from  the  progressive  expansion  in 
the  volume  of  the  mails.  Postage  rates  have  not  been  diminished  as 
postal  business  has  increased  and  hence  the  average  receipts  of  the 
postal  service,  per  unit  of  business,  have  remained  constant  while 
the  plan  of  payment  for  railway  transportation,  as  has  been  seen, 
provides  a  steadily  decreasing  expense  per  unit  for  the  element  of 
cost  represented  by  railway  facilities  and  services. 

An  understanding  of  the  manner  in  which  the  rates  are  applied 
is  also  necessary  to  a  complete  comprehension  of  the  table.  Thus  the 
minimum  rates  nominally  applicable  to  an  average  daily  weight  of  two 
hundred  pounds,  are,  in  practice  applied  whenever  the  average  is  211 
pounds  or  less  because  no  account  is  taken  of  an  increment  of  weight 
that  would  not  have  been  sufficient,  before  the  reductions  of  1876  and 
1878,  to  warrant  an  additional  paj^ment  of  one  dollar.  At  present  this 
minimum  rate  (for  other  than  land-grant  routes)  is  $42.75  and  the 
additional  sum  of  85.5  cents  is  paid  for  each  twelve  pounds  above  two 
hundred  pounds  of  average  daily  weight,  up  to  five  hundred  pounds 

68 


69 


Average  daily  weiarht  paid  for. 
in  pounds 


With  old  divisor 


200 
211 
246 
300 
400 

5110 
510 
1100 
1105 
700 

800 

900 

1.000 

1.019 

I.ISH 

1,250 
1.500 
1.519 
1.T50 
1.772 

2.000 
2.059 
2.402 
2.500 
3,000 


Witi)  new  divisor 

under  Postmaster 

General's  Order 

No.  412 


Pay  per  milo  per 


Averages  per  ton  per  mile,  in  cents 


Other  than  land-grant  routes 


171 
181 
211 
257 
343 

429 
445 
514 
519 
soil 

nsr 

771 

857 

S7S 

l.OIS 

1.07! 
1,2S0 
1.302 
l.SOil 
1.519 

i.71-1 
1 .7115 
2.059 
2.143 
2.571 


$42.76 
42.75 
45..-.1 
49.59 
50.43 

G4.12 
114.12 
118.40 
(18.40 
72.07 

70.95 
81.22 
85.50 
.85.50 
93.19 

95.70 
lOn.87 
100.87 
117.13 
1 1 7.99 

1 28.25 
128.25 
133.38 
135.09 
141.93 


On  and  after 
July  1,  1907 


S42.75 


52.15 

."js.itn 
59..sr, 
04.12 
IH.12 
08.40 

71.82 
75.24 
78.00 
79.51 
85.60 

.88.00 
97.47 
9.S.:i2 
100.87 
100.87 

11.5.42 
117.99 
12.S.25 
129.91 
135.94 


Land-grant  routes 


Other  than  land-grant  routes 


Land-grant  routes 


Prior  to 
July  1,  1907 


1.34.20 
34.20 


51.72 
54.72 
.58.13 


111.97 
08.40 
08.40 


.V5.50 
85..5II 
93.70 
94.39 

102.00 
102.00 
1IM1.70 
108.07 
113.54 


.534.20 
34.20 
31.20 

41.72 

47.19 
47.88 
51.30 
51. .30 
54.72 

57.15 
(111.  19 
02.92 
03.01 

0,8,-19 

70,11 
77.97 
70.00 
85.50 
85.50 

94  39 
102.00 
103.90 
1118,75 


,1134.20 
31.20 
34.20 
30.93 
41.72 

47.19 
47.8H 
51.30 
51 ,30 
•54,72 

57.45 
00,19 
02.92 
63.01 
68,40 

70.14 


78.00 

.85 

50 

85 

30 

92 
94 

19 

102 

111 

10,8.7 


130,681 
129,40 


911,144 

81,942 
78,942 
72,843 
72,242 

01.102 
57,004 
54.033, 
53.057 
50.093 

4V.951 

44.909 
42.708 
42..55II 

40.974 
39,804 
35.488 
34,528 
3,0,2,'iO 


130.581 
129.40 
111.04 
98.339 
83.307 

75.387 
73.085 
0.S.285 


67.304 
63.4:9 
50.202 
49.898 
45.962 

45.015 
41.521 
41.372 
39.021 
38.539 

3G.S75 
36.620 
34.123 
33.217 
28.054 


109.265 
103.57 
94.158 
84.494 
72.109 


0; 


.5.59 
03.1.59 
58.275 
57.793 
53,063 

49.109 
40.127 
43.700 
42.925 
40.075 

39.157 
30.417 
36.977 
34.213 
.■14.0.39 

32.78(1 
31.844 
28.389 
27.022 
24.183 


109.26.5 
103.57 
88.833 
78.658 
00.645 

00.307 
58.948 
51.033 
54.1.81 
49,950 

45,887 
42,733 
40,204 
39.919 
30.769 

36.008 
33.214 
33.099 
31.219 
30.833 

29.408 
29.295 
27.298 
20.571 
23.163 


109.265 

1I13..57 


00,045 

00,.307 
58.948 
54.633 
54.181 
49.960 

45,887 
42,73:; 
411.2111 

:i9,;iiii 

30,709 

30.008 

33,214 

31.219 
30.833 

29.498 
29.296 
27.298 
26.671 
23.163 


Reduction.  prcwiBt 
rates  compared 

with  those 

in  force  prior  to 

July  1.  1907. 

per  cent 


None 
None 
5.65 
0,84 
7.58 

8.00 

o.eo 

0.2B 
6.2B 

5.S1 

0.07 
8.43 
8.00 
7.01 
8.26 

8.04 
8.80 
8.00 
8.76 
9.42 

111.00 
8.00 
3.86 
3.8(1 
4.22 


3,600 
3,559 
4,000 
4,152 
5.000 


3.fMio 
3,051 
3,429 
:i,559 
4,286 


149,62 
149.62 
1.50.40 
1.58.17 
171.00 


141.93 
142.78 
147.91 
149.02 
100.74 


119.70 
119.70 


120.54 
130.,80 


113,54 
114,22 


119,71 
12,8,51 


113,54 
114,22 
118.32 
119.70 
128.59 


27.315 
20.807 
24.994 
24.342 
21.853 


25.911 
25.039 
23.628 
23.026 
20.642 


21  ..853 
21.494 
19.994 
19,474 
17.482 


20.728 
20.610 
18.901 
18.421 
10.433 


20.728 
20.510 
18.901 
1.8.421 
10.433 


5.14 
4.67 
6.40 
6.41 
6.011 


5.079 
5.920 
0.001 1 
7,000 
8.00O 


4.353 
5.079 
6.143 
6,000 
6,857 


171.00 
180.40 
181.20 
192.37 
202.03 


101.59 
171.00 
171.81 
180.74 
189.67 


130.80 
144.32 
145.00 
153..89 
102.10 


129.27 
13(1..8(l 
137.44 
144..59 
151.73 


129.27 
136.,80 
137.44 
144.59 
151.73 


21.513 
19.452 
19.304 
17.560 
10.185 


20.329 
18.438 
18.297 
10.498 
16.160 


17.210 
15,561 
15.442 
14.047 
12,947 


10.203 
14.761 
14.637 
13.199 
12.120 


10.203 
14.751 
14.037 
13.199 
12.120 


6.60 
5.21 
5.21 
0.04 
6.39 


9.000 
10.000 
15.000 
20,000 
25,0110 

30,000 
35,000 
40,000 
45,000 
48,103 

50,000 
50.120 
75.111111 
IIHI.IIIIII 
125.000 

150.000 
20O.(XIO 
250.(HI(l 
3011.000 
3.50.000 

400.000 
450,009 
5011,(1011 
550,000 


7,714 

8.571 

12..S57 

17.143 

21.421 

25.714 

30.1 

34.2,'<0 
.3,S,.571 
41,231 

42,857 
48.103 
64,286 
85.714 
107.143 

128.571 
171,429 
214.280 
2,57,143 
3(1(1,(1(1(1 

342,857 
386,714 
428,571 
471,429 


213.75 
224.01 
277.87 
330.,S8 
384,75 

437.76 
491.02 
544.63 
59,8.50 
030.99 

651.51 

717.34 

919.12 

1.180.83 

1.4.53,50 

1,720,20 
2.2,54.(;,-l 
2,7.89.(11 


.■').40ll.,s,s 
5.995.2(> 


197.80 
20i;.73 


293.114 
33.7.51 

3S0.50 
424,42 
408.28 
511.33 
53.8.J4 

007|7 

703J19 

969.49 

1,1761:; 


1,381.77 
1,793,81 
2,200.99 
2,618,1 :: 
3,031,41 

3,443.45 
3.855.48 
4.267.T7 
4.679.8 1 


171.(10 


;i5(i 

2(1 

393 

29 

435 

70 

478.80 

5(14 

79 

.521 

21) 

57:; 

.'<7 

73;) 

29 

949.40 

1.102 

80 

1..-170 

2(1 

1.803 

70 

2.231 

20 

2.058 

70 

;!.(i.s(; 

20 

158.24 
1(i;5..-18 
20(1.48 
234.91 
27(1.00 

304.44 
339..53 
374.02 
409.00 

4:111.51 

444.15 


807 

54 

991 

04 

1.173 

74 

1,540,84 

1.907 

04 

2.27:' 

14 

2,041 

:;4 

168,24 

1  o5.:is 

21111.48 
2:14.91 
2711.00 

:104,44 


409.0(1 
430.51 

444.15 
4.85.74 
filll.,SO 

3.513.70 
3.941.20 
4,.308.70 
4.790.20 


:;. ;.n 

:i.'728.74 
4.10,5.,S4 


940,05 
i,105.:-4 

1 ,4.34,53 
1.706.11 
2.094.:t0 
2,424.,88 

2,754.07 
3,084.20 
3,413„84 
3,743,0:1 


15.170 
14,314 
1 1 .8:17 
10..571 
9.834 

9.324 

8,970 
8.70(1 
8.498 
8.382 

8.320 
,8,108 
7,8:11 
7,.584 
7,430 

7.328 
7.203 
7.128 
7.079 
7.04:1 

7.010 
6.995 


14.043 


10.675 

9.382 

8.626 

S.106 

7.748 

7.481 

7.201 

T.148 

7.095 

0.91:1 

6.601 

6.195 

0.012 

6.SS0 

5.731 

6.639 

6.570 

6.534 

5.501 

6.475 

5.464 

5.437 

12.141 
1  1 .450 
9.409 
8.457 

7.807 

7,459 
7,100 
0.9011 
6,799 
0.705 

6.661 
6.534 
6.204 
0.007 
5.944 

5.802 
5.703 
5.703 
5.063 
6.034 

6.013 
6.696 
5.583 


11.235 
10.66S 
8.540 
7.5(^1 
0.901 

0.4.84 
0.199 
5.9,84 
5.8(18 
;5.719 

5.531 
5.:i21 
5.100 
6.004 

5.000 
4,92:; 
4.874 
4.842 
4.820 

4.803 
4.789 
4.765 


11.236 
10.568 
8.540 
7.505 
6.901 

0.4,84 
0.199 
5.084 
6.808 
6.719 

5.676 
5.631 
5.204 
4.957 
4.806 

4.709 
4.683 
4.511 
4.461 
4.427 

4.:W9 
4.379 
4.363 
4.349 


7.46 
S.10 
9.81 
11.25 
12.29 

13.07 
13.07 
14.02 
14.50 
14.71 

14.78 
10.36 
10.98 
18.31 
19.08 

19.68 
20.44 
20.90 
21.19 
21.42 

21.60 

21.74 
21.85 
21.94 


69A 


u'hen  another  rate  is  applied,  but  nothing  is  paid  for  any  fraction  of 
twelve  pounds.  Under  this  system  the  rate  for  211  pounds  average 
daily  weight  is  $-12.75  while  for  212  pounds  it  is  $-13.60.  In  the  same 
manner  the  five  hundred  pounds  rate  is  extended  to  apply  to  519 
pounds,  the  1,0UU  pounds  rate  to  1U19  pounds,  the  1500  pounds  rate 
to  1519  pounds,  the  2000  pounds  rate  to  2059  pounds,  the  3500  pounds 
rate  to  3559  pounds,  the  5000  pounds  rate  to  5079  pounds,  the  -18000 
pounds  rate  to  -18103.95  pounds.  It  is  this  plan  of  applying  the 
rates  which  produces  the  notable  fluctuations  in  the  percentages  of  re- 
ductions as  disclosed  in  the  upper  half  of  the  last  column.  The  table 
will  be  found  on  the  insert,  paged  as  69A. 

The  headings  in  the  table  referred  to  indicate  the  significance  of 
the  figures  it  contains  but  they  deserve  all  the  emphasis  that  can  be 
given.  Each  horizontal  line  in  the  table  represents  the  results  ac- 
cruing, or  that  formerly  would  have  accrued,  to  a  railway  route  for 
an  actual  service  measured,  so  far  as  these  postal  services  can  be 
measured  in  terms  of  weight  and  distance,  by  the  figure  at  the  ex- 
treme left  of  that  line,  in  the  first  column.  Thus,  the  last  line  repre- 
sents an  annual  service  equivalent  to  carrying  86,075  tons  over  each 
mile  of  a  particular  route.  Prior  to  July  1,  1907,  the  effective  date  of 
Postmaster-General's  Order  No.  412,  this  volume  of  service  would 
have  resulted  in  stating  the  average  daily  weight  on  which  payment 
is  calculated  as  550,000  pounds;  now  it  gives  an  average  daily  weight 
one-seventh  less  or  471,429  pounds.  This  change  in  the  method  of 
applying  the  statute,  alone  and  had  there  been  no  other  change  adverse 
to  the  railways  atfected,  would  have  reduced  the  pay  of  a  route  hav- 
ing this  volume  of  service  no  less  than  $839.61  for  each  mile  of  its 
length.  But  there  have  been  additional  reductions  so  that  it  appears 
that  if  this  volume  of  mail  is  now  carried  on  other  than  a  land-grant 
route  the  annual  ]^ay  per  mile  is  $4,679.81  or  $1,315.45  less  than 
$5,995.26,  which  would  have  been  the  rate  prior  to  July  1,  1907. 
This  is  a  reduction  of  21.94  per  cent,  as  stated  in  the  last  column  at 
the  right  of  this  line.  Similarly,  if  the  route  were  a  land-grant  route 
its  pay  would  have  been  $4,796.20  per  mile  prior  to  July  1,  1907,  and 
now  would  be  $3,743.03  per  mile,  also  a  reduction  of  21.94  per  cent. 
Prior  to  July  1,  1907,  the  pay  of  this  route,  if  not  a  land-grant  route, 
would  have  been  at  the  rate  of  6.965  cents  per  ton  per  mile,  it  would 
now  be  at  the  rate  of  5.437  cents  per  ton  per  mile.  The  correspond- 
ing ton-mile  rates  for  land-grant  routes  are  5.572  cents  and  4.349 
cents,  respectively. 

These  average  ton-mile  rates  deserve  especial  attention.  Con- 
sidering the  fifth  column  from  the  right,  which  contains  the  standard 
rates   now  in   force,    it   shows   that   for   the   lowest   weight   stated   the 

69 


Average  rate   per    ton    per    mile  in   cents 


z/soa 

39/^5 
46950. 
S477i 

704XS. 

7aR:so. 


70 


rate  is  considerably  over  one  doilar  per  ton  per  mile  and  that  the  snbse- 
qnent  decrease  in  the  average  is  very  rapid  nntil  it  approaches  the 
lower  end  of  the  colnmn  when,  although  the  decrease  continues,  the 
rate  of  decrease  is  more  moderate.  Of  course  the  highest  rates  are  in 
recognition  of  the  character  and  cost  of  service  on  routes  having  very 
small  quantities  of  mail  and  represent  a  small  aggregate  of  railway 
mail  pay  and  a  relatively  meagre  portion  of  the  total  paid  to  the 
railway's  for  mail  services  and  facilities.  The  average  daily  weight 
tends  on  all  routes,  or  at  least  on  nearly  all  routes,  to  become  greater 
as  an  incident  to  the  development  of  the  country,  its  growth  in  popu- 
lation, industry  and  wealth,  and  the  progressive  increase  in  the  utiliza- 
tion of  postal  facilities.  Hence  in  the  normal  course,  every  route 
tends  to  pass  from  a  class  having  higher  pay  per  ton  mile  to  a  class 
having  lower  pay  and  to  continue  downward,  each  route  tlius  con- 
stantly approaching  the  minimum  although  the  rate  of  approach  varies 
greatly  with  different  routes.  Commenting  upon  this  fact,  in  his 
report  to  the  Joint  Postal  Commission,  in  1900,  Professor  Henry  C. 
Adams  assigned  it  as  ground  for  the  assertion  that  "the  law  of  1873 
is  drawn  in  harmony  with  the  fundamental  law  of  transportation"' 
which,  he  declared,  is  that  "a  reduction  in  rates  is  a  normal  result 
of  an  extension  of  traffic"  and,  he  said,  "justifies  a  relatively  more  rapid 
reduction  in  the  rate  per  ton  per  mile  for  a  route  whose  traffic  in- 
creases, let  U8  say,  from  fifty  pounds  to  one  thousand  pounds  dail}', 
than  for  a  route  whose  traffic  increases  from  five  thousand  pounds  to 
ten  thousand,  or  fifty  thousand  to  one  liundred  thousand  pounds."* 

The  percentages  of  reduction,  in  the  last  column  of  the  table  are 
very  significant.  Those  corresponding  to  annual  service  of  less  than 
to  939  tons  per  average  mile  of  route  represent  reductions,  effected  by 
means  of  Order  No.  412,  only,  for  below  this  volume  of  service  the 
statutory  change  of  1907  had  no  effect.  The  curious  fluctuations  in 
the  percentages  of  the  reductions  so  produced,  ranging  from  3.85 
per  cent  to  10.00  per  cent  and  the  highest  percentage  representing  a 
smaller  volume  of  service  than  the  lowest  percentage,  indicate  the  com- 
plicated nature  of  the  change,  apparently  so  simple,  brought  about 
by  that  order.  Beyond  939  tons  the  percentages  progress  steadily 
until  they  reach  the  maximum,  21.94  per  cent,  in  the  last  line,  which 
represents  the  heaviest  mail  movement. 

The  figures  in  the  last  foregoing  table  are  general  in  their  sig- 
nificance. The  table  which  follows  shows  precisely  what  has  hap- 
pened to  particular  routes,  taking  for  illustrative  purposes,  those  routes, 
with  a  few  exceptions,  on  which  mail  was  Aveighed  in  the  years  1910 
or  1911  and  having,  under  the  present  mode  of  calculation,  an  average 

*  Fifty-sixth  Congress,  Document  No.  89,  Part  2,  pp.  204-5. 

71 


daily  weight  in  excess  of  twenty  thousand  pounds.  All  routes  of  this 
class  are  included  except  a  few  having  lap  service  or  in  which  other 
extraordinary  conditions  might  have  been  thought  to  impair  the  value 
of  the  comparisons.     (See  the  table  on  the  inserts  73A  and  72B.) 

The  table  just  indicated  rej^reseuts  sixty-three  routes  on  which  mail 
Avas  weighed  during  the  years  1910  and  1911  with  a  total  length  of 
17,645.72  miles.  Although  this  represents  but  7.88  per  cent  in  length 
of  the  railway  mail  routes  of  the  country,  these  routes  receive,  under 
present  adjustments,  $11,276,600.8-!:  per  annum  of  railway  mail  pay, 
exclusive  of  any  pay  for  postal  cars  which  they  may  receive,  or  30.92 
per  cent  of  the  total  transportation  pay  of  all  the  railway  routes.  Their 
present  proportion  of  the  transportation  pay  of  the  third  and  fourth 
weighing  sections,  in  which  weighing  took  place  in  1910  and  1911,  is 
41.99.  Other  routes,  weighed  in  those  years  and  having  average  daily 
weights  of  twenty  thousand  pounds  or  more,  but  excluded  from  the 
table  because,  for  one  reason  or  another,  they  might  have  been  thought 
to  impair  the  accuracT  of  the  comparisons,  receive,  under  the  adjust- 
ments of  those  years.  $4,552,414.49  per  annum.  Adding  this  sum 
to  the  total  of  present  transportation  pay  of  the  routes  in  the  table 
gives  $18,829,015.33  which  is  55.38  per  cent  of  the  transportation  pay 
of  the  third  and  fourth  weighing  sections.  These  data  serve  to  demon- 
strate the  importance  of  the  fact,  disclosed  by  the  table,  that 
the  average  reduction  in  transportation  pay  alone  for  these  sixty- 
three  heavy  routes,  since  the  close  of  the  first  half  of  the  calendar 
year  1907,  is  18.97  per  cent.  A  tabulation  of  the  postal  car  pay  for 
these  routes  would  show  a  still  greater  rate  of  reduction. 


COXCLUSIOX  DRAWX  FEOM   THESE   REDLX'TIOXS. 

This  report  does  not  assume  to  base  any  final  conclusion  as  to  the 
wisdom  or  justice  of  a  further  reduction  upon  the  fact  that  within 
less  than  five  3'ears  railway  mail  pay  has  been  thus  heavily  reduced. 
Such  a  record  as  that  disclosed  in  the  foregoing  pages  does,  however, 
create  a  presumption  that  is  strongly  adverse  to  any  plan  which  would 
immediately  require  further  large  sacrifices  of  revenue  on  the  part  of  the 
railway  instrumentalities  of  the  postal  service.  When  this  presumption 
has  been  supplemented  by  proof,  whicli  will  presently  be  adduced  (see 
pages  74-5),  that  the  railways  were  not  overpaid  prior  to  July  1,  1907. 
the  gross  injustice  of  adding  to  the  series  of  reductions  begun  on  that 
date  and  still  in  progress  must  be  conceded.  It  is  now  generally  recog- 
nized that  present  railway  revenues  are,  at  the  most,  but  barely  adequate 
to  provide  for  the  requirements  of  increased  wages,  higher  prices  of 

72 


materials  and  supplies,  progressively  augmented  standards  of  service  and 
the  reasonable  return  upon  investments  that  is  necessary  to  attract  the 


.jj.,1 


correctly  tabulated  nor  forwarded  to  Congress  the  original  re- 
ports which  he  obtained  from  the  railroads  and  (b)  in  so  far  as 
comparisons  can  be  made  with  the  figures  which  he  did  submit, 
they  do  not  warrant  but  are  destructive  to  the  conclusions  and 
recommendations  which  he  makes  and  tend  strongly  to  demon- 


73 


Averagra  daily  weiffht 


Under 
Order 
No.  412 


As  it 

would 

liave  been 

prior  to 

July  1, 1907. 

for  same 

service 


Transportation  pay 
per  mile  per  annum 


Now  in  force 


As  it  would 

have  been 

prior  to 

July  1.  \WJ, 

for  same 

service 


Transportation  pay  for  route  per  annum 


As  it  would 
have  been 

prior  to 
July  1.  1907, 


17G022 
145018 
i:il023 
131024 
163014 
173001 
131005 
131047 
155001 
141058 
171010 
135130 
131028 
13303S 
131045 
150007 
170053 
170014 
101013 
135010 
150008 
157002 
167014 
168001 
13:!010 
167021 
167029 
176042 
131016 
133012 
167003 
150095 

135017 


Davis  :  Tehama.  Cal 

Burlington,  Iowa  ;  St,  Louis,  Mo 

Toledo  :  Cincinnati.  Ohio 

Hamilton.  Ohio :  Indianapolis,  Ind 

Miles  City.   Montana;   Spokane,  Washington 

Portland :  Ashland,  Oregon 

Cleveland,  Ohio ;   Leavittsburg,  Ohio 

Chicago,  Ohio  ;  Chicago,  Illinois 

Kansas  Cit,v,  Missouri:  Denver,  Colorado 

St,  Paul,  Minnesota ;  Hanliinson,  North  Dalsota 

Blaine ;  Seattle,  Wash 

Bernice ;  Colehour.  Illinois 

Parkersburg,  West  Virginia ;  Cincinnati,  Ohio 

Indianapolis  ;    Monon,    Ind 

Toledo,  Ohio  ;  Elkhart,  Indiana 

Long\'iew ;    San  Antonio.  Texas 

Barstow  ;   Los  Angeles.   Cal 

Los  Angeles,  California ;  Yuma,  Arizona 

Fargo,  North  Dakota ;  Miles  Cit,v,  Montana 

Galeshurg  :    Quincy,    Illinois 

Te.xarkana.  Arkansas;  Fort  Worth,  Texas 

Omaha,  Nebraska;  Denver,  Colorado 

El  Paso,  Texas ;  Carrizozo,  New  Mexico 

Yuma,  Arizona ;  EI  Paso,  Texas 

Cincinnati,  Ohio ;  East  St,  Louis,  Illinois 

Santa  Rosa ;  Carrizozo,  New  Mexico 

Tucumcari ;  Satita  Rosa.  New  Mexico 

Barstow  ;    Needles.    Cal 

Gahen,  Ohio ;  Granite  City,  Illinois 

Evansville  (L,  &  N.  Depot  1  ;  Terre  Haute,  Indiana, 

Isleta,  New  Mexico;  Needles,  California 

Texlioma,   Oklalioma ;    Stale   Line    between   Texas 

and  New  Mexico 

Chicago ;  East  SI.  Louis.  Illinois 


Southern  Pacific  Company 

Cliicago,  Burlington  &  Quincy  Railroad .,. 

Cincinnati,   Hamilton   &  Dayton   Railway 

Cincinnati.    Hamilton   &  Dayton   Railw.ay 

Northern    Pacific   Railway 

Southern   Pacific  Company 

Erie  Railroad 

Baltimore  &  Ohio  Railroad 

Union  Pacific  Railroad 

Minneapolis,  St.  Paul  &  Sault  Ste.  Marie  Railway... 

Great    Northern   Railway 

Pennsylvania   Company 

Baltimore  &  Ohio  Southwestern  Railroad 

Chicago,  Indianapolis  &  Louisville  Railway 

Lake  Shore  &  Michigan  Southern  Railway 

International  and  Great  Northern  Railroad 

.Uchison,  Topeka  &  Santa   Fe  Railway 

Southern  Pacific  Conipan.\- 

Northern   Pacific  Cniupany ' 

(.'liicago.  Bill  liiiL'loii  &  t^uincy  Railroad 

Texas  &   Pacific   Railway 

Chicago.  Burlington  &  Quincy  Railroad 

El  Paso  &  Southwestern  Conipan.v 

Southern    Pacific   Company 

Baltimore  &  Ohio  Southwcstci'n  Railroad 

El  Paso  &   Southwestern  Company 

Chicago,  Rock  Island  &  EI  Paso  Railway 

Atchison,  Topeka  &  Santa  Fe  Railway 

Cleveland,  Cincinnati,  Chicago  &  St,  Louis  Railway. 

Chicago  &  Eastern  Illinois  Railroad 

.\tchlson.  Topeka  &  Santa   Fe  Railway 

Chicago.   Rock   Island  &  Gulf  Railway 


t'liii'ago  &  Alton  Railroad. 


111.83 
218.01 
202.30 

!)8.SK) 
762.32 
.342.71 

49.30 
278.61 
630.76 
217,011 
119.61 
9.16 
195.25 

!15..34 
142.44 
342,06 
141.23 
251.68 
40.'>.3:l 

99.76 
246.10 
537.37 
145.4:1 
564.29 
3:i5.lj6 
128.48 

50.37 
169.07 
+48.05 
110.04 
56,5.17 

92,35 

2.80.68 


20,465 
20,921 
21,096 
21,135 
21.506 
21,735 
21,758 
21,821 
21,920 
21,950 
23,123 
23,831 
24,854 
24.915 
25.122 
27.,344 
27,494 
28,120 
28.831 
29,568 
29,9.35 
30,252 
30,918 
31,183 
31.,357 
31,738 
32.287 
32.444 
.32,502 
32,844 
33„327 

33.708 
36.065 


23,876 
24,408 
24,811 
24.657 
2.5.089 
26,357 
25,384 
25,458 
25,673 
25,808 
26,977 
27,803 
28,996 
29,087 
29,306 
31,901 
:12,076 
32,807 
33,636 
34,496 
.34.924 
35.294 
38.071 
36.380 
36.583 
37,028 
37,868 
37,851 
,37,919 
38,318 
38,881 

39,326 
42,004 


9:327.76 
332.03 
.3:m.26 
334.26 
270.65 
.140.71 
340.76 
.341.57 
:!42..38 
.336.05 
354.56 
361.87  ' 
372.43 
372.43 
374.87 
397.01 
399.24 
.324.59 
:129.79 
42ll.:;6 
423.60 
426.85 
430.79 
434,04 
438,23 
4:',9.72 
445,30 
:!59.6S 
449.60 
4.53.66 
366.82 

469..30 
486.15 


$.371.92 
.377.91 
380.47 
380.47 
308.48 
.388,17 
.388,17 
.389.02 
.390.73 
390.73 
405.27 
414.67 
42C.04 
427.50 
4.30.06 
458.28 
459.99 
.374,14 
380.98 
485.64 
490.77 
494.19 
502.74 
500.16 
507.87 
513.1X1 
519.84 
417.24 
522.40 
.526.88 
426.13 

537.79 
,566.86 


$36,663,40 
72,150.77 

67,620.79 

:B,08S.39 

200,321,90 

116,764.72 
16,830,13 
95.164.81 

219,041,02 
72,952,22 
42,373.40 
3,314.72 
72.716.96 
,35,507.47 
53.396.48 

136,006,47 
58,384.66 
81,602,81 

16,3,364.88 
41,935.11 

104,247.96 

220,378.38 
62,649,17 

244,922,^7 

147.096.28 
56.494.71 
26,437.68 
60.811.09 

201.443.28 
50,320,04 

207,316.65 

12,416.70 
136,452.58 


$41,691.81 

81.972.46 

76.989.08 

37.662.73 

236,160.47 

133,029.74 
19.171.72 

108.384.86 

249.973.42 
84,823.58 
48.433.82 
3.798.38 
a3.301.46 
40.757.85 
61.257.75 

166.769.28 
84.964.39 
94.163.56 

188.710.82 
48.447.46 

120.778.50 

265,562.88 
73,113,48 

285.621.03 

170.471.64 
65,010.24 
:!0,862.00 
70,642.77 

234.061.32 
68,429,88 

240,835.89 

40,664,91 
159.106.26 


(Table  concluded  on  next  page). 
72  A 


daily  weight  in  excess  of  twenty  tliousand  pounfls.  All  routes  of  this 
class  are  included  except  a  few  having  lap  service  or  in  which  other 
extraordinary  conditions  might  have  been  thought  to  impair  the  value 
of  tlie  comparisons.     (See  the  table  on  the  inserts  72A  and  72B.) 

The  table  just  indicated  represents  sixty-three  routes  on  wliicli  mail 
was  weighed  during  the  years  1310  and  1911  with  a  total  lengtli  of 
lT.(i45.~8  miles.  Altliough  this  represents  but  7.88  per  cent  in  length 
of  the  railway  mail  routes  of  the  country,  these  routes  receive,  under 
present  adjustments,  $14.2T(i.fiOO.S-l  per  annum  of  railway  mail  pay, 
exclusive  of  any  pay  for  postal  cars  which  tliey  may  receive,  or  3f>.i)-J 
per  cent  of  tlie  total  transportation  pay  of  all  the  railway  routes.  Tlieir 
present  proportion  of  tlie  transportation  pay  of  the  third  and  fourtli 
weighing  sections,  in  which  weighing  took  place  in  1910  and  1911,  is 
41.99.  Other  routes,  weighed  in  those  years  and  having  average  daily 
weiglits  of  twenty  thousand  pounds  or  more,  but  excluded  from  the 
table  because,  for  one  reason  or  another,  they  miglit  have  been  thought 
to  impair  the  accuracy  of  the  comparisons,  receive,  under  the  adjust- 
ments of  those  years,  .$4,5.52.414.49  per  annum.  Adding  this  s\nn 
to  the  total  of  present  transportation  pay  of  tlie  routes  in  the  table 
gives  $18,829,015.33  which  is  55.38  per  cent  of  the  transportation  pay 
of  the  tliird  and  fourth  weigliing  sections.  These  data  serve  to  demon- 
strate tlie  importance  of  tlie  fact,  disclosed  by  the  table,  that 
the  average  reduction  in  transportation  pay  alone  for  these  sixty- 
three  heavy  routes,  since  the  close  of  the  first  half  of  the  calendar 
year  1907,  is  18.97  per  cent.  A  tabulation  of  the  postal  car  pay  for 
these  routes  would  show  a  still  greater  rate  of  reduction. 

J. 

CONCLUSION   DRAWN   FEOil   THE8K   REDUCTIONS. 

This  report  does  not  assume  to  base  any  final  conclusion  as  to  tlie 
wisdom  or  justice  of  a  further  reduction  upon  tlie  fact  that  within 
less  than  five  years  railway  mail  pay  has  been  thus  heavily  reduceil 
Such  a  record  as  that  disclosed  in  the  foregoing  pages  does,  however, 
create  a  presumption  that  is  .strongly  adverse  to  any  plan  which  would 
immediately  require  furtlier  large  sacrifices  of  revenue  on  the  part  of  the 
railway  instrumentalities  of  the  postal  service.  When  this  presumption 
has  been  supplemented  by  proof,  wliicli  will  presently  be  adduced  (see 
pages  74-5),  that  tlie  railways  were  not  overpaid  prior  to  July  1,  1907. 
the  gross  injustice  of  adding  to  the  series  of  reductions  begun  on  that 
date  and  still  in  progress  must  be  conceded.  It  is  now  generally  recog- 
nized that  present  railway  revenues  are,  at  the  most,  but  barely  adequate 
to  provide  for  the  requirements  of  increased  wages,  higher  prices  of 


1  Bounds  All  routes  of  this 
daily  weight  in  excess  of  f'-f*-'' .^^^Tla^  service  or  in  which  other 
class  are  in_cluded  except  a  few  haung  lap 


lias    ijctrii    oui^iyn-iin,. —    -,.     I T ^.  .  .  , - 

pages  74-5),  tliat  the  railways  were  not  overpaid  prior  to  July  1,  lim'. 
the  gross  injustice  of  adding  to  the  series  of  reductions  hegun  on  that 
date  and  still  in  progress  must  be  conceded.  It  is  now  generally  recog- 
nized that  present  railway  revenues  are,  at  the  most,  but  barely  adequate 
to  provide  for  the  requirements  of  increased  wages,  higher  prices  ot 


(Tjible  (•(included   from  previous  pnge.) 


AveraEe  daily  weight 


Transportation  pay 
per  mile  per  annum 


Under 
Order 

No.  412 


As  it 

would 

iiave  been 

prior  to 

July  1, 1907, 

for  same    | 

service      i 


Iluutingtou  ;    Portland,    Oregon 

La  Juula,  Colorado;  Albuquerque.  New  Mexico 

Chicago,   Illinois;   Terre  Haute,   Indiana 

St.  Louis ;  Kansas  City,  Mo 

Poeatello,  Idaho ;  Huntington,  Oregon 

Toledo.   Ohio ;   Granite  City,   Illinois 

Chicago.  Illinois ;  Milwaukee,  Wisconsin 

Granger,  Wyoming ;  Poeatello,  Idaho 

Spokane  ;  Everett,  Washington 

Chicago,  Illinois;  Kansas  City,  Missouri 

Chicag*.   Illinois ;   Davenport,   Iowa 

Fargo.  North  Dakota ;  Havre,  Montana 

Willows ;   Madison  Tower,  Illinois 

Chicago   (Park  Row  Station);  Carbondale,   111 

Cleveland ;   Cincinnati,   Ohio 

Havre,   Montana ;    Spokane.    Washington 

Casselton ;   Devils   Lake,  North  Dakota 

San  Francisco   (Ferry  Station),  Cal. ;  Ogden,  Utah. 

Columbus ;    Cincinnati,    Ohio 

Xenia ;  New  Paris.  Ohio 

St.  Louis  (Union  Station),  Mo.;  Granite  City.  III.. 

Union  Pacific  Transfer.  Iowa;  Ogden,  Utah 

Minneapolis.  Minnesota;  La  Cro-sse,  Wisconsin 

Columbus,  Ohio;   Indianapolis,   Indhma 

Milwaukee ;  La  Crosse.  Wis 

Pittsburgh,  Pennsylvania;  Chicago,  Illinois 

Indianai)olis,  Indiana;  East  St.  Louis.  Illinois 

Cliicago,    Illinois ;    Burlington,    Iowa 

Chicago.   Illinois ;   Milwaukee.   Wisconsin 

RulTtilo,  New  York ;  Chicago,  Illinois 

Total  ~ 


Oregon   Railroad  &  Navigation  Company 

Atchison.  Topeka  &  Santa  Fe  Railway 

Chicago  &  Eastern  Illinois  Railroad 

I  Wabash  Railroad  

Oregon  Short  Line  Railroad , 

,  Wabash  Railroad  

Chicago  &  Northwestern    Railway 

Oregon  Short  Line  Railroad 

Groat  Nortlii'i  II   Railway 

Atchison,  Topeka  &  Santa  Fe  Railway 

Chicago,  Rock  Inland  &  Paciiic  Railway 

Great    Northern    Railway. 

Vfindalia    Railroad 

Illinois  Central  Railroad 

Cleveland,  Chicinnati.  Chicago  &  St.  Louis  Railway.... 

Great    Northern    Railway 

j  Great   Northern   Railway 

;  Southern  Pacific  Company 

I'iftsburgh.  Cincinnati.  Chicago  &  St.  Louis  Railway... 
Pittsburi-'h.  Cincinnati.  Chicago  &  St.  Louis  Railway... 

St.  Louis  Merchants   Bridge  Terminal   Ry.   Co 

Union   Pacific  Railroad 

Chicago,  Milwaukee  &  St.  Paul  Railroad 

I'ittsliurgh.  (;ineinnati,  Chicago  &  St.  Louis  Railway... 

Chicago,  Milwaukee  &  St.  Paul  Railroad 

Pennsylvania    Company 

^'andalia    Riiilroad ■ , . . . 

r'liicago,  Burlington  &  Quincy  Railrond 

Chicago.  Milwaukee  &  St.  Paul  Railroad 

Lake  Shore  &  Michigan  Southern  Railway 


401.1)1 

.30,771 

42,899 

If493.46 

348.37 

38,000 

45,453 

515.39 

177.80 

41,080 

48,627 

543.01 

270.49 

41,812 

48.781 

.-.40.1  ;7 

326.88 

42,880 

50,027 

r..j.-..11i 

428.31 

43,487 

30,735 

5.".0.il,s 

85.00 

44,170 

51,532 

riOS.l'.i 

214.70 

47,498 

55,414 

{■,i)2,::ii 

305.98 

50,133 

58,488 

(127.41 

454.00 

5.3,948 

02,930 

iiO;*..o.". 

182.84 

54,371 

63,433 

007. .S!» 

711.99 

5B,4b7 

05,866 

688.13 

3.37 

59,015 

08,851 

712.37 

306.80 

59,806 

09,774 

675.69 

203.18 

59,824 

09,795 

720..37 

531.07 

01,099 

71,282 

732.81 

126.47 

71,421 

83,324 

831.81 

783.77 

93,613 

109,215 

1.045.43 

119.74 

94,620 

110,397 

1.053.i;9 

52.12 

1.30,978 

152,808 

1,405.01 

9.BS 

144,3r5 

108,437 

1,530.72 

993.78 

147,210 

171,752 

1,560.93 

140.80 

180,205 

210,239 

1,737,8-3 

187.99 

164,037 

191,376 

1.723.09 

197.00 

201,244 

234.785 

1.II29..3:: 

468.43 

211,644 

240,918 

2,180.01 

238.22 

215,.585 

251,510 

2,219.09 

205..57 

226,784 

204,581 

2,.3ir,.71 

85.39 

2.33,903 

272,887 

2.244..33 

522.18 

428,833 

500,072 

4,noo,r,s 

1 7.045.T2 



.^SMll.nT 

As  it  V 


ul<i 

have  been 

prior  to 

July  1.  19OT. 

for  same 

service 


.$575.41 

602.77 

636.97 

638.88 

651.51 

659.20 

667.75 

709.65 

742.14 

790.02 

795.15 

820.80 

853.29 

090.16 

802.09 

878.94 

1,008.04 

1,284.21 

1,297.03 

1,750.18 

1,016.91 

1,952.82 

2,364.07 

2.102.29 

2,(120.56 

2,755.60 

2,805.25 

2.044.62 

3,033,54 

5,481.74 

.111,001.43 


Transportation  pay  for  route  per  annum 


As  it  would 

have  been 

prior  to 

July  1.  1907. 


If  198,320.50 

.«;  1.21 13.03 

14.24 

179,546.41 

2110,9X0.98 

14.50 

96.547.17 

I1M,233.27 

14.7,1 

149,4,8II.:!0 

170,588.63 

1.5,35 

181,4Sil..3ii 

212,905.59 

14,78 

239,717.112 

2.S2..341.95 

15.10 

48,290.1-. 

50.758.75 

14.91 

129.3i:i.sl 

152..361.85 

il5.13 

101,1174.111 

227.O,Sfl.00 

15.40 

:»l,2117.1(i 

.■15S.(1(  19.08 

16.110 

122,117.11(1 

H.^:i,S5.23 

10.00 

489,941.07 

.5.84.401.39 

1(1.111 

2,400.08 

2,875,59 

1U..52 

176,656.23 

211,779.43 

16.58 

180.3S0.97 

227,042.75 

l(l..-.ll 

389.50(1.75 

467,306,03 

1(1.05 

103.190.01 

127,486.82 

^7.4S 

819,392.34 

1,000,525,27 

18..iU 

126.408.32 

155,306.37 

18.01 

73,229.12 

91,219,38 

19.72 

14,817,30 

18,555.69 

20.15 

1,551,221.01 

1.940,673.46 

20.07 

244,687.0!^ 

332,861.06 

20.49 

323,923,08 

400,488.90 

20.31 

381,274.77 

519,008.26 

26.54 

1.021,403.14 

1.290.a33.81 

20.87 

528,031.61 

(1(18.200.06 

20.90 

476,041.16 

(1(13.323.53  . 

21.36 

191,043.15 

259,033,08 

26.02 

2,139,206.22 

2,8,52,011.39 

24.99 

4.270,000.,S4 

.1117.017.9,52.44 

1S.97 

72  B 


strate  the  inadequacy  of  the  present  payments  for  railway  mail 
facilities  and  services. 

Third,  That  the  Postmaster-General's  present  recommenda- 
tion of  a  further  reduction  of  approximately  $9,000,000.00  in 
annual  railway  mail  pay  follows  a  series  of  reductions  brought 
about  by  legislation  or  by  departmental  orders  that  have  in  less 
than  five  years  diminished  raihvay  mail  pay  $8,532,148.75. 

The  Committee  on  Railway  Mail  Pay  having,  therefore,  demon- 
strated that  there  is  before  Congress  no  showing  entitled  to  serious  con- 
sideration in  favor  of  the  further  reduction  recommended  by  the  Post- 
master-General, asserts  that  he  should  be  required  to  make  a  complete 
disclosure  of  the  facts  in  his  possession  and  that  the  railways  are  en- 
titled to  demand,  as  of  right,  that  before  going  further  an  at  least 
plausible  and  prima  fade  case  should  be  presented  by  the  Post  Office 
Department  or  that  its  unsupported  proposal  should  be  withdrawn  or 
ignored. 

The  railways  welcomed  the  inquiry  into  this  commonly  misunder- 
stood subject  and  co-operated  in  obtaining  the  data  sought  because  they 
believed,  and  still  believe,  that  any  investigation,  conducted  wisely  and 
fairly,  with  due  recognition  of  the  established  principles  of  transporta- 
tion economics  and  with  reasonable  regard  for  the  just  guarantees  of 
the  Federal  Constitution  would  leave  no  vestige  of  doubt  that  Avithin 
the  past  five  years  the  process  of  reduction  in  railway  mail  pay  has 
been  forced  so  far  as  to  constitute  an  injustice  to  an  industry  upon 
which  almost  one-fifth  of  the  population  of  the  country  is  directly 
or  indirectly  dependent,  and  in  the  successful  operation  of  which  the 
entire  country  is  concerned. 

In  the  subsequent  pages  of  this  report  the  Committee  will  seek 
to  demonstrate  the  just  right  of  the  railways  to  receive  from  the  Gov- 
ernment that  fair  and  reasonable  relief  which  they  had  hoped  it  would 
be  the  pleasure  of  the  Postmaster-General  to  recommend  and  initiate. 


B. 

RAILWAY    MAIL   PAY    XOT   EXCESSIVE    BEFORE    RECENT 
SERIES  OF  REDUCTIONS  BEGAN. 

Having  described,  defined  and  measured  the  extensive  series  of 
reductions,  to  which  the  Postmaster-General  now  seeks  to  add  a  still 
further  reduction,  it  follows  that  the  fact  that  these  reductions  have 
taken  place  is  proof  that  the  present  railway  mail  pay  is  too  low — 

74 


First.  Unless  such  pay  was  too  high  before  the  rednctions 
were  efPected,  or. 

Second.  Unless  the  whole  series  and  aggregate  amount  of 
these  reductions  were  fully  justified  by  changes  in  conditions  that 
occurred  during  the  period  in  which  they  took  place. 

The  Congressional  Joint  Commission  to  Investigate  the  Postal 
Service,  which  reported  on  January  14,  1901  is  sufficient  authority  for 
the  fact  that,  on  that  date,  railway  mail  pay  was  not  excessive.  The 
late  Senator  William  B.  Allison,  of  Iowa;  the  late  Senator  Edward  0. 
Wolcott,  of  Colorado;  Senator  Thomas  S.  Martin,  of  Virginia;  the 
late  Eepresentative  Eugene  F.  Loud,  of  California;  former  Eepresenta- 
tive  W.  H.  Moody,  of  Massachusetts,  and  former  Eepresentative  T.  C. 
Catchings,  of  Mississippi,  six  of  the  eight  members  of  the  Commission, 
united  in  the  following: 


^& 


"Upon  a  careful  consideration  of  all  the  evidence  and 
the  statements  and  arguments  submitted,  and  in  view  of  all 
the  services  rendered  by  the  railroads,  we  are  of  opinion 
that  'the  prices  now  paid  to  the  railroad  companies  for  the 
transportation  of  the  mails'  are  not  excessive,  and  recom- 
mend that  no  reduction  thereof  be  made  at  this  time." 
Fifty-Sixth  Congress,  Second  Session,  Senate  Document  No.  89, 
pp.  19,  22,  25,  29. 

This  expression  was  the  result  of  prolonged,  patient  and  intelli- 
gent investigation  by  men  whose  patriotism,  fidelity  and  capacity  has 
never  been  questioned.  Their  conclusions  were  sanctioned  by  the  Con- 
gress to  which  they  reported  and  the  authority  of  their  judgment  has 
not  been  and  cannot  now  be  impaired  or  diminished. 


C. 

CHA]N^GED     CONDITIONS     SINCE     1901     WOULD     JUSTIFY 
INCEEASED  EATHEE  THAN  EEDUCED  EAILWAY 

MAIL  PAY. 

No  one  will  for  one  moment  contend  that  there  has  been  any  net  re- 
duction in  the  cost  of  supplying  railway  mail  services  and  facilities 
since  the  year  in  which  the  report  of  the  Joint  Commission  to  Investi- 
gate the  Postal  Service  was  rendered.  In  fact  all  changes,  save  possibly 
those  in  efficiency  of  organization  and  management  have  been  in  the 
opposite  direction  and  it  is  well  known  that  the  economies  effected  by 
this  means  extend  in  but  the  smallest  degree  to  the  mail  service.  Con- 
sider, for  example,  that  large  proportion  of  railway  gross  receipts  from 

75 


operation  which  goes  to  railway  laljor;  every  item  of  cost  of  that  char- 
acter has  greatly  increased  since  the  year  1901.  In  1901  the  railways 
reporting  to  the  Interstate  Commerce  Commission  received,  in  gross, 
from  their  operating  sources,  the  sum  of  $l,o88,526,03T.OO  and  ex- 
pended in  wages  and  salaries  the  sum  of  $610,713,701.00;  in  1910  the 
corresponding  totals  were  $2,750,667,435.00  and  $1,143,725,306.00. 
Computations  from  these  totals  show  that  in  1901  the  railways  expended 
in  wages  and  salaries  $38.45  out  of  each  $100.00  of  gross  operating  re- 
ceipts while  in  1910  the  proportion  had  increased  to  $41.58  a  difference 
of  $3.13  in  each  $100.00  of  gross  receipts.  This  difference  does  not 
seem  small  but  it  is  hardly  realized,  except  when  the  calculation  is  made, 
that  on  the  basis  of  the  gross  receipts  of  1910  it  could  amount,  as  it 
does,  to  an  additional  expense  of  $86,095,890.72.  It  is  to  be  borne  in 
mind  that  this  largely  increased  payment  to  labor  is  in  spite  of  the  fact 
that  a  part  of  the  increase  in  wages  rates  has  been  offset  by  higher  effi- 
ciency in  methods  and  facilities.  Comparisons  of  rates  of  wages,  from 
the  annual  statistical  reports  of  the  Interstate  Commerce  Commission, 
follow : 


Class  of  employees 


Average  wages  per  day 


1901 


1910 


Increase, 
per  cent 


General  office  clerks 

Station  agents   

Other   station    men 

Enginemen    

Firemen     

Conductors    

Other  trainmen   

Machinists    

Carr)enters    

Other  shop  men 

Section  foremen  

Other  trackmen   

Telegraph  operators  and  dispatchers . . . 
Employees,  account  floating  equipment. 
All  other  employees  and  laborers 


$2.19 
1.77 
1.59 
3.78 
2.10 
3.17 
2.00 
2.. 32 
2.06 
1.7.5 
1.71 
1.23 
1.98 
1.97 
1.09 


$2.45 
2.14 
1.91 
4.34 
2.57 
3.73 
2.72 
3.03 
2.39 
2.20 
1.99 
1.57 
2.16 
2.10 
1.96 


11.87 
20.90 
20.13 
14.81 
18.98 
17.67 
36.00 
30.60 
16.02 
25.71 
16.37 
27.64 
9.09 
6.60 
15.98 


Figures  like  the  foregoing  require  no  comment — they  plainly  show 
that  in  their  relations  with  labor  the  railways  could  find  evidence  sup- 
porting a  contention  for  higher  railway  mail  pay,  that  this  large  ele- 
ment of  cost  supplies  no  justification  whatever  for  any  reduction. 

During  the  year  1901,  the  railways  reporting  to  the  Interstate 
Commerce  Commission  expended  $104,926,568  for  locomotive  fuel,  in 
1910  their  expenditures  for  the  same  purpose  aggregated  $217,780,953. 
Comparing  these  figures  with  gross  receipts  from  operation  it  is  found 
that  the  cost  in  locomotive  fuel  of  each  $100.00  of  gross  receipts  was 
$6.61  in  1901  and  $7.92  in  1910.  an  additional  cost  of  supplying  rail- 
way services  amounting,  on  the  l)asis  of  the  receipts  of  1910,  to  $36,- 
033,743.40.     A  further  analysis  of  the  supi^lies  that  must  be  purchased 


76 


in  order  that  railways  juay  be  maintained  and  operated  would  show  that 
in  the  great  majority  of  instances,  and  those  affecting  the  largest  aggre- 
gate of  expenses,  the  upward  tendency  in  prices  has  been  as  marked  as  in 
the  case  of  fuel  for  locomotives.  It  is  apparent,  therefore,  that  in  the 
matter  of  the  cost  of  necessary  materials  and  supplies,  no  justification 
for  the  recent  reductions  in  railway  mail  pay,  but  rather  reasons  for  a 
movement  in  the  other  direction,  can  be  found. 

If  there  are  any  facts  in  the  transportation  or  industrial  events 
of  the  last  decade  that»have  warranted  reductions  in  railway  mail 
pay  below  the  reasonable  level  that  existed  in  the  year  1901,  those 
facts  have  not,  it  is  respectively  submitted,  been  brought  to  the 
attention  of  Congress  by  the  Postmaster-General  or  in  any  other 
way,  nor  are  they  matters  of  public  or  general  notoriety.  No  such 
facts  are  within  the  knowledge  of  the  Committee  on  Railway  Mail 
Pay  nor  have  the  members  of  that  committee  been  informed  that 
there  is  any  claim  that  such  facts  do  exist. 


D. 

THE  PASSENGER  TRAIN  SERVICES  ARE  NOT  REASONABLY 

REMUNERATIVE. 

Railway  managers  have  long  realized  that  their  passenger  services 
are  not  directly  productive,  in  most  cases,  of  returns  equal  to  their  cost. 
In  order  to  arrive  at  this  conclusion  as  to  the  railways  of  the  United 
States,  as  an  whole,  it  is  not  necessary  to  resort  to  any  plan,  of  prob- 
lematical accuracy,  for  the  apportionment  of  joint  expenses.  On  the  con- 
trary, the  discrepancies  between  average  train  mile  expenses,  for  all 
classes  of  revenue  producing  trains,  and  the  aggregate  of  the  average 
train  mile  receipts  from  all  of  the  passenger  train  services  is  so  vast 
that  it  is  at  once  apparent  that  it  cannot  be  bridged  by  any  conceivable 
difference  between  the  respective  train  mile  expenses  of  passenger  and 
freight  trains.  The  annual  statistical  report  of  the  Interstate  Com- 
merce Commission  for  the  fiscal  year  1910  shows  (p.  60)  that  the  aver- 
age receipts  per  train  mile  from  all  of  the  passenger  train  services  ren- 
dered during  that  year  amounted  to  $1.30  while  the  average  cost,  for 
operating  expenses  alone,  of  running  trains  of  all  classes  was  $1.49 
per  mile.  The  latter  average  includes  nothing  whatever  for  taxes  or  for 
any  return  to  investors.  The  available  data  indicate  that  reasonable 
allowances  for  these  purposes  would  raise  the  average  cost  to  approxi- 
mately $2.25  per  train  mile. 

These  figures  must  satisfy  any  candid  inquirer  that,  whatever 
difference   a   complete   and   detailed   investigation   might   prove   to 

77 


exist  between  the  cost  of  running  the  different  classes  of  trains 
over  equal  distances,  that  difference  cannot  equal  the  difference 
between  the  average  train-mile  cost  of  all  trains  and  the  average 
train-mile  receipts  of  passenger  trains.  The  averages  thus  amount 
to  a  demonstration  of  the  truth  that  the  passenger  train  services  as 
an  whole  are  relatively  unprofitable.  It  will  presently  be  shown  that 
of  the  three  passenger  train  services,  those  rendered  on  behalf  of  the 
mails  fall  farthest  below  the  standard  of  reasonable  remuneration. 

Document  Xo.  105,  however,  itself  contaftis  convincing  evidence  of 
the  unprofitableness  of  the  passenger  train  services  as  an  whole.  It  is 
only  necessary  to  supplement  the  Postmaster-General's  estimates  of 
passenger  train  expenses  for  operation  and  taxes,  incomplete,  inadequate 
and  fhr  below  the  truth  as  they  are,  by  figures  showing  the  receipts 
from  those  services  and  the  receipts  and  expenses  of  all  railway  services 
in  order  to  demonstrate  this  fact.  An  accurate  computation  represent- 
ing the  month  of  jSTovember,  1909,  made  up  wholly  from  Document  No. 
105  and  the  ofilcial  reports  of  the  Interstate  Commerce  Commission 
covering  every  railway  for  which  the  former  shows  an  estimated  operat- 
ing and  taxation  cost  of  handling  the  mails  of  $10,000.00  or  more  (ex- 
cept the  Grand  Trunk  System  for  which  the  Interstate  Commerce  Com- 
mission does  not  report  comparable  data  and  the  Atchison,  Topeka  &' 
Santa  Fe  for  which  the  Postmaster-General  used  figures  for  January, 
1910,  instead  of  November,  1909,  and  also  used  different  mileage  from 
that  covered  by  the  reports  of  the  Interstate  Commerce  Commission) 
affords  this  demonstration.  The  details  of  this  computation  are  shown 
in  Appendix  A,  the  following  are  the  results: 


Item 

All  services 

Passeng-er  train 
services 

Gross  receipts   

Operating  expenses  and  taxes 

Percentage  of   gross    receipts    required   to 
meet  operating  expenses  and  taxes . . . 

$170,042,915.51        $43,719,680.67 
109,960,722.73         32.300,818.99 

64.67                          73.88 

The  foregoing  aggregates  are  simply  the  totals  of  official  figures 
including  under  that  designation  the  Postmaster-General's  estimates  of 
the  amounts  of  operating  expenses  and  taxes  chargeable  to  the  passen- 
ger train  services.  Those  in  the  column  headed  "All  services"  are  the 
totals  of  figures  found  in  Bulletin  of  Eevenues  and  Expenses  No.  10 
issued  by  the  Interstate  Commerce  Commission  and  No.  18  of  the  same 
series.  The  aggregate  given  for  gross  receipts  of  the  passenger  train 
services  is  the  total  of  the  receipts  from  passengers  reported  by  the  In- 
terstate Commerce  Commission  in  the  same  bulletins  plus  the  mail  rev- 
enues of  the  same  railways  reported  by  the  Postmaster-General  in  Doc- 
ument No.   105    (Table  7,  pp.  272-281)    and  plus  one-twelfth  of  the 


78 


express  revenues  of  the  same  railwa3's  for  the  fiscal  year  containing  the 
month  of  November,  1909,  as  reported  by  tjie  Interstate  Commerce 
Commission  in  its  statistical  report  for  1910.  The  aggregate  cost  for 
operation  and  taxes  for  the  passenger  train  services  is  the  total  of  the 
Postmaster-General's  estimate  for  these  railways  as  shown  by  his  table 
7  (Document  No.  105,  pp.  272-281).  The  significance  of  these  aggre- 
gates will  be  appreciated  when  it  is  noted  that  the  railways  which  they 
represented  earned,  according  to  the  Postmaster-General's  statement, 
in  the  month  of  November,  1909,  $3,109,160.32  of  mail  pay  or  86.18 
per  cent  of  $3,607,773.13  the  total  represented  in  Document  No.  105. 
As  has  been  demonstrated  herein,  the  Postmaster-General's  plan  of 
apportioning  expenses  tends  most  strongly  to  understate  the  cost  of  the 
passenger  train  services,  yet  even  the  misleading  and  inadequate  esti- 
mates which  he  put  forth  in  Document  No.  105,  ivhen  compared  ivith 
the  receipts,  show  that  these  services  are  so  excessively  costly  that,  if 
any  alloivance  tvhatever  is  made  for  interest  on  the  investment,  they 
are  unmistakably  productive  of  much  less  than  the  fair  average  return 
necessary  for  tlie  adequate  remuneration  of  railway  employees  and  a 
reasonable  return  upon  railway  investments.  If  the  Postmaster-Gen- 
eral's method  of  apportionment  had  assigned  its  full  and  proper  cost  to 
the  passenger  department  the  percentage  of  expense  to  receipts  would 
have  been  much  higher  than  73.88  and  the  difference  between  such 
higher  percentage  and  6-1.67  per  cent,  which  expresses  the  ratio  of  all 
expenses  to  all  receipts  would  have  measured  with  accuracy  the  extent 
of  the  losses  of  the  passenger  train  services.  With  this  qualification  in 
mind,  it  is  sufficient  to  repeat  that  the  totals  for  the  forty-six  railways 
represented  disclose  the  fact  that  total  operating  expenses  and  taxes 
consumed  64.67  per  cent  of  the  gross  receipts  from  all  services  while 
73.88  per  cent  of  the  aggregate  receipts  from  all  the  passenger  train 
receipts  only  equals  the  inadequate  portion  of  operating  expenses  and 
taxes  assigned  to  those  services  by  the  Postmaster-General.  As  the 
usual  requirement  for  an  aggregate  sufficient  to  afford  a  reasonable 
rate  of  return  on  railway  investments  is  approximately  one-half  of 
the  total  operating  expenses  it  is  evident  that  where  it  is  admitted 
that  73.88  of  receipts  is  required  to  meet  operating  expenses  and 
taxes  there  must  be  a  very  heavy  total  loss. 

The  situation  which  exists,  under  which  the  passenger  business  of 
almost  all  railways  is  conducted  without  adequate  compensation,  is  not 
one  with  which  the  railways  are  satisfied  nor  has  it  arisen  through  their 
volition.  It  will  certainly  be  admitted  that  they  are  warranted  in  ask- 
ing that  they  be  not  required  to  accept  relatively  less  for  mail  transpor- 
tion  than  they  receive  from  the  other  services  rendered  on  their  pas- 
senger trains. 

79 


E. 

RAILWAY  GEOSS  RECEIPTS  FROM  MAIL  TRANSPORTATIOX 

LOWER  THAN  FROM  ANY  OTHER  PASSENGER 

TRAIN  SERVICES. 

By  adopting  the  car-foot  mileage  basis,  which  is  substantially 
a  space  basis,  for  the  apportionment  of  such  passenger  train  ex- 
penses as  he  has  seen  fit  to  consider  the  Postmaster-General  has, 
in  effect,  argued  that  car-foot  mileage  made  in  the  mail  service 
ought  justly  to  produce  as  much  revenue  per  unit  thereof  as  the 
average  unit  of  car-foot  mileage  made  in  the  other  passenger  serv- 
ices. Present  mail  pay  is  seen  to  be  inadequate  when  it  is  sub- 
jected to  this  test.  Even  the  grossly  reduced  figures  of  car-foot  mile- 
age made  in  the  mail  service  contained  in  Document  No.  105,  figures 
obtained,  as  hereinbefore  fully  shown,  only  after  ignoring  a  great  deal 
of  space  actually  required  for  the  mails  and  transferring  a  large  quan- 
tity of  other  space  so  required  to  the  passenger  service  reveal  this  fact. 
Thus  in  Document  No.  105,  on  page  59,  all  of  the  follovtdng  figures  are 
to  be  found: 


Car-foot  mileage  made  in  all  passenger  train  services,  total 

Car-foot  mileage  made  In  the  mail  service,  total 

Proportion  of  car-foot  mileage  made  in  the  mail  service  to 
car-foot  mileage  made  in  all  passenger  train  services, 
percentage    


12,940,229.965.19 
926.164.458.83 


r.i6 


Therefore,  upon  the  Postmaster-General's  own  showing,  unless  the 
railways  earn  $7.16  out  of  each  $100.00  earned  by  their  passenger 
trains  by  carrying  the  mails,  their  mail  pay  is  too  low.  Fc^r  the 
facts  its  is  necessary  to  turn  to  the  statistical  reports  of  the  Interstate 
Commerce  Commission.  The  latest  of  these  contains  figures  for 
the  fiscal  year  1910  and  is  appropriate  for  the  purpose  because  that 
year  includes  the  month  covered  by  the  Postmaster-General's  inquiry. 
On  page  510  of  this  report  it  appears  that  the  gross  receipts  from  pas- 
senger train  services  of  the  railways  reporting  to  the  Commission  for 
the  fiscal  year  that  ended  with  June  30,  1910  were  as  follows : 


Item 


Amount 


Per  cent  of  total 


Fi'om   the  mails 

From  other  passenger  train  services. 


Total 


$48,946,052 
715,827,302 


$764,778,854 


6.40 
93.60 


100.00 


Thus  while  the  Postmaster-General  admits  that  7.16  per  cent 
of  the  car-foot  mileage  of  passenger  trains  is  required  for  the  mail, 
and  by  inference  that  they  ought  to  get  7.16  per  cent  of  their  pas- 
senger train  revenue  from  the  same  source,  the  official  statistics, 
compiled  by  the  great   Federal  agency  that  is  especially  charged 


80 


with  the  duties  o£  railway  supervision,  show  that  they  derive  only 
6.40  per  cent  of  their  passenger  train  revenues  from  the  mails. 

The  difference  in  these  percentages  may  seem  inconsequential  but  it  is 
not  so  to  the  railways  which  invariably  find  differences  between  reason- 
able returns  to  their  owners  and  actual  losses  expressed  in  tiie  smallest 
ratios — in  dollars  and  cents,  based  on  the  actual  gross  passenger  train 
receipts  shown  above,  this  difference  of  little  more  than  three-quarters 
of  one  per  cent  (actually,  0.76  per  cent)  amounts  to  $5,812,377.49  and 
it  would  have  required  an  increase  in  the  mail  pay  of  1910  of  that 
amount  to  place  the  mail  service  on  a  parity  with  the  other  passenger 
train  services.  And  this  figure  results  from  using  the  much  too  low 
estimates  of  car-foot  mileage  made  in  the  mail  service  adopted  by  the 
Postmaster-General.  The  less  complete  but  far  more  accurate  figures 
compiled  from  the  copies  of  the  reports  to  the  Postmaster-General  which 
are  in  the  possession  of  the  Committee  on  Railway  Mail  Pay  and  previ- 
ously given  in  this  report  (see  page  20)  compare  with  the  Interstate 
Commerce  Commission's  figures  as  to  gross  receipts,  as  follows: 


Service 

Percentages 

Car-foot  mileage 

Gross  receipts 

Pnsspnsrprs     .                   

80.01 

10.67 

9.32 

84  81 

Flvnrpss                    

8  79 

Mail                   

6.40 

Total   

100.00 

100.00 

The  same  compilation   (see  page  20)   also  shows  that  during  the 
month  covered  by  the  Postmaster-General's  investigation  each  one  thou- 
sand car-foot  miles  made  in  tJie  mail  service,  produced,  oji  the  average, 
$3.23  in  gross  I'eceipts;  each  one  thousand  in  express  service,  $3.8(5  and 
in  the  transportation  of  passengers,  $4.42.    These  data  absolutely  estab- 
lish the  fact  that  the  mail  services  rendered  by  the  railways  are  the 
lowest  paid  of  all  their  passenger  train  services  and  passenger  train 
services,  as  an  whole,  have  already  been  shown  to  be  commonly  rendered 
without  adequate  return.     It  is  fully  believed  that  any  candid  con- 
sideration of  the  foregoing  must  lead  to  conviction  that  not  only  is 
the   Postmaster-General's   recommendation  of  a  further   reduction 
in  railway  mail  pay  unwarranted  and  that  any  further  reduction 
would  be  a  gross  injustice  but,  also,  that  reasonably  fair  treatment 
of  the  railways,  their  employees  and  owners  and  the  traveling  and 
shipping  public,  demands  an  increase  in  the  total  pay  until  it  shall 
be  somewhat   commensurate  with   the  pay   for  other   and   similar 
services. 


81 


F. 

RAILWAYS  SHOULD  BE  PAID  FOR  APARTMENT  CARS. 

The  system  of  railway  mail  pay  provided  by  law  recognizes  that 
railways  ought  not  to  be  required  to  supply  train  space  for  distribution 
of  mails  en  route  without  special  compensation.  It  is  obviously  quite  a 
different  thing  to  provide  a  traveling  post-office  in  which  postal  clerks 
are  supplied  with  facilities  for  their  duties  identical  with  those  per- 
formed in  important  distributing  offices,  from  carrying  the  same  bulk 
and  weight  of  mail  in  closed  and  locked  pouches.  Yet  while  this  dif- 
ference is  recognized  in  the  law  it  is  but  imperfectly  and  inadequately 
recognized  for  an  arbitrar}'^  distinction  is  made  between  those  traveling 
post  offices  which  are  forty  feet  or  more  in  length  and  those  which  are 
shorter,  the  former  being  specifically  paid  for  and  the  latter  being  re- 
quired to  be  supplied  without  special  compensation.  This  injustice  is 
admitted  by  the  Postmaster-General,  in  Document  jSTo.  105,  as  follows: 

''The  laws  now  in  force  relative  to  railway  mail  pay  pro- 
vide .  .  .  that  an  additional  amount  may  be  allowed  for 
railway  post-office  cars  when  the  space  for  distribution  purposes 
occupies  forty  feet  or  more  of  the  car  length.  No  additional 
compensation  is  allowed  for  space  for  distribution  purposes 
occupying  less  than  forty  feet  of  the  car  length.  This  dis- 
tinction is  a  purely  arbitrary  one  and  without  any  logical 
reason  for  its  existence."     Document  No.  105,  p.  3. 

The  annual  report  of  the  Second  Assistant  Postmaster-General  for 
the  fiscal  year  1911  shows  (page  43)  that  on  June  30,  1911  the  rail- 
ways, under  this  plan,  were  supplying  1,464  full  postal  cars,  which  were 
paid  for  and  3,819  apartment  cars  which  were  not  paid  for.  Of  the  for- 
mer 1,213  and  of  the  latter  3,204  were  in  constant  daily  use,  the  re- 
mainder constituting  the  necessary  reserve.  Together  these  classes  of 
cars  were  the  working  places  of  15,461  postal  clerks  and  while  being  so 
used  during  the  fiscal  year  they  traveled,  in  the  aggregate,  313,383,045 
miles.  The  following  shows  the  distribution  of  this  mileage  between 
the  different  classes  of  cars,  the  payments  on  account  of  the  class  of  cars 
paid  for  and  the  average  rate  per  mile  of  payment. 


Miles 
run 

Payment  to  railways 

Kind  of  Car 

Amount 

Average  per  mile 
run,  in  cents 

Full  postal   cars 

94,010,089          $4,737,788.75                5.04 
219,372,356    i              nonp                         iion<> 

Apartment   cars    

The  foregoing  shows  that  the  railways  receive  for  the  use  of  a  car, 
which  in  every  relation  is  to  them  the  full  equivalent  at  least  of  a 
standard  passenger  coach,  only  about  the  fares  of  two  and  one-half  pas- 


82 


sengers  at  the  low  rate  of  two  cents  per  mile.  But  even  if  they  were 
paid  one-third  as  much  per  mile  run  hy  apartment  cars  as  they  are  per 
mile  run  by  full  postal  cars  the  219,372,356  miles  run  by  the  former, 
for  which  they  now  receive  nothing,  would  have  produced  $3,685,455.58 
gross  revenue  in  1911.  In  Document  No.  105  (Table  4,  p.  65)  the 
Postmaster-General  gives  the  following  figures  of  car-foot  mileage  which 
are  exclusive  of  all  space  that  he  defines  as  '^storage  space"  and  "dead 
head"  space. 


Kind  of  Car 

Car-foot  miles  during 
November,  1909 

Apartment  cars    

430,944.968.10 

Postal  cars   

364,633,119.64 

Total  

795,578,087.74 

It  has  already  been  shown  (see  pages  19-33)  that  these  figures  are 
too  low  but,  leaving  that  fact  aside,  they  show  that  the  space  utilized 
in  apartment  cars  amounted  to  84.61  per  cent  of  the  space  utilized  in 
full  postal  cars.  There  can  be  no  valid  reason  why  the  railways  ought 
not  to  be  paid  as  much  for  a  car-foot  mile,  placed  at  the  disposal  of 
and  utilized  for  the  postal  service,  in  an  apartment  car  as  for  similar 
space  in  a  full  postal  car.  If  they  were  so  paid  they  would  receive  for 
apartment  cars,  on  the  basis  of  the  Postmaster-General's  figures,  84.61 
per  cent  of  $4,737,788.75,  their  postal  car  pay,  or  $4,008,643.06. 
Neither  of  these  figures  is  offered  as  indicating  the  precise  rate  of  pay- 
ment for  apartment  cars  which  would  be  reasonable  and  just  but  both 
serve  approximately  to  suggest  the  lowest  possible  limit  of  the  minimum 
payment  which  substantial  justice  would  permit. 

In  this  connection,  it  must  not  be  overlooked,  that  the  furnishing  of 
traveling  post  offices  is  not  a  natural  function  of  railway  carriers,  nor 
one  that  is  undertaken  by  them  without  reluctance.  These  cars,  whether 
full  postal  cars  or  apartment  cars,  are  not  essential  to  the  transporta- 
tion service  which  is  the  normal  purpose  for  which  railways  exist,  but 
they  are  required  by  the  Post  Office  Department  in  order  that  the  labor 
of  distribution  may  be  performed  while  the  mails  are  undergoing  trans- 
portation. This  is  an  obligation  not  assumed  with  relation  to  any  other 
element  of  railway  traffics  If  the  Department  could  evolve  a  different 
method  of  serving  tlie  public,  the  railways  would  welcome  relief  from 
the  requirement  to  supply  traveling  post  of^ces  of  any  sort;  would  will- 
ingly surrender  the  meagre  compensation  now  received  for  the  fraction 
of  these  offices  wliich  is  paid  for,  and  would  gladly  confine  their  mnil 
services  to  those  of  transportation  only.  P)ut  if  such  cars  are  nec^es- 
sary  in  order  that  the  public  may  receive  the  service  which  it  demands, 
the  railways  ought  to  be  adequately  and  fairly  paid  for  all  of  them. 

83 


G. 


THE  WEIGHT  BASIS  OF  RAILWAY  MAIL  PAY  SHOULD  BE 

ASCERTAINED  ANNUALLY. 

There  is  no  prcteuse^  under  the  present  system,  that  the  railways 
are  paid  for  all  the  mails  which  they  carry.  The  weight  basis  is  ascer- 
tained only  once  in  four  years  and  the  weight  resulting  from  these 
weighings  of  one  A^ear  becomes  the  basis  of  payment  for  a  period  of  four 
years  beginning  with  the  fiscal  year  which  commences  next  after  the 
year  of  the  weighing.  But  the  weight  of  mail  carried  never  remains 
stationary,  it  is  the  exception  that  on  any  important  route  it  does  not 
increase  during  the  whole  four  year  period.  This  is  shown  by  the  table 
on  page  84A  which  compares  the  results  of  the  weighings  of  1907  and 
1011  on  the  first  forty  routes,  shown  in  the  reports  for  those  years  of  the 
Second  Assistant  Postmaster-General,  for  which  comparable  data  are 
given. 

It  should  be  noted  that  tbe  routes  illustrated  in  this  table  are 
forty  of  tlio  first  forty-three  routes  shoAvn  in  the  annual  report  for 
1907,  it  having  been  necessary  to  omit  routes  131011,  lolOlS  and 
131026  as  the  termini  of  131011  and  131018  were  changed  between 
1907  and  1911  and  131020  was  vacant  in  the  earlier  year.  Of  the 
forty  routes  shown  twenty-four,  or  a  little  more  than  half,  show  in- 
creases and  sixteen  show  decreases.  But  from  July  1,  1907  to  June 
30,  1911,  inclusive,  all  payments  were  adjusted  upon  the  basis  of  the 
weights  of  1907  so  that  during  the  entire  period  of  four  years  whatever 
weights  may  liave  been  carried  there  was  no  change  in  compensation. 
If  there  is  a  decrease  in  volume  during  the  quadrennial  period  this  sys- 
tem is  unfair  to  the  Government,  if  there  is  an  increase  it  is  unfair  to 
the  railways,  but  owing  to  the  increase  in  National  wealth,  in  business 
activity  and  in  population,  it  has  always  happened  that  the  balance  of 
unfairness  has  operated  to  produce  a  loss  to  the  railways.  The  only 
rectification  of  this  situation  reconcilable  with  justice  is  to  provide  for 
more  frequent,  tliat  is  to  say  for  annual  weighings  and  readjustments 
of  pay.  No  conmum  carrier  would  he  required  or  even  permitted  to 
contract  to  transport  tlie  entire  oul]nil  of  any  private  enterprise  during 
a  four-years  period  for  a  fixed  aninial  sum  regardless  of  diminution  or 
expansion  in  its  volume.  A  contract  covering  so  long  a  period  at  an 
unchanging  aggregate  payment  is  indefensible  from  every  point  of  view 
anil  unjust  alike  to  the  public  and  to  the  railways. 

84 


:.D  BE 


13100] 
131002 
13100E 
13100-^ 
131005 

131006 
131007 
131008 
131009 
131010 

131012 
131013 
131014 
131015 
131016 

131017 
131019 
131020 
131021 
131022 

131023 
131024 
131025 
131027 
131028 

131029 
4310SO 
131031 
131032 
131033 

131034 
131035 
131036 
131037 
131038 

131039 
131040 
131041 
131042 
131043 


as  pnn- 
was  not 
II  eighty 
nt  extra 
he  post- 
railway 
iron,  in 
require- 
er  mails 
nd  it  is 
ffice  De- 
that  the 
r  routes, 
for  the 
the  least 
iy  either 
;r  routes 
force   to 


iscussed, 
extraor- 
;r  which 
compen- 
ender. 

tmaster- 
Listice  or 
1  princi- 


reported 
ive  data 
the  rail- 
facilitios 

for  the  mails   (see  pages  9-16)  ;  (b)  cost  of  furnishing  a  large  volinne 
of  personal  transportation,  not  in  postal  cars,  to  officers  and  representa- 


85 


Namb«r  et  Route 


131001 
131002 
131003 
131004 
131005 

131006 
131007 
13100S 
131009 
131010 

131012 
131013 
131014 
131015 
131016 

131017 
131019 
131020 
131021 
131022 

131023 
131024 
131025 
131027 
131028 

131029 
•J31030 
131031 
131032 
131033 

131034 
131035 
131036 
131037 
131038 

131039 
131040 
131041 
131042 
131043 


Average  dslly  weight,  in  poundi 


190.07 

12,584 

46S.43 

155.503 

46.99 

1,721 

144.59 

2.655 

49.35 

18,623 

148.38 

9.784 

80.10 

4,081 

32.26 

577 

116.57 

1,287 

28.85 

881 

131.00 

3,009 

263.34 

50,803 

119.74 

65,754 

188.06 

133,211 

448.59 

34,763 

21.91 

1,158 

428.32 

43,694 

415.49 

1,261 

15.45 

117 

47.08 

1,286 

202.89 

21,708 

99.04 

26,046 

300.87 

16,821 

19.20 

1,012 

195.35 

30,631 

148.80 

1,310 

331.17 

574 

22.14 

169 

190.92 

217,029 

18.04 

388 

316.18 

11,574 

30.14 

46 

76.82 

3,628 

83.95 

946 

44.04 

634 

95.59 

545 

110.89 

1,345 

162.41 

2,159 

50.00 

528 

84.77 

8,256 

1911 

~  11,802^ 

211,644 

1,483 

4,776 

21,758 

12,448 

5,497 

437 

1,641 

584 

4,283 
59.824 
94,620 
164,037 
32,502 

1,057 

43.407 

1,479 

129 

1,982 

21,093 
21,135 
20,029 
5,876 
24,854 

1,208 

474 

154 

295,564 

397 

12,048 

57 

3,801 

404 

952 

642 
1,240 
1,918 

586 
13,729 

84A 


2,121 
3,135 


2,664 
816 


354 


1.274 
8,931 

28,872 
30,826 


218 

12 


3,208 
4,864 


78,535 
9 

474 

11 

173 

.sis 

97 


58 
5,473 


79.89 
10.83 


27.23 
17.43 


42.34 

17.55 
43.91 
23.14 


17.29 
10.26 
54.12 


19.07 
480.63 


36.19 
2.32 

4.10 

23.91 

4.77 

50.16 

17.80 


782 
238 


140 
297 


2,261 


101 
287 


613 
4,911 


5,777 

102 

100 

15 


10.98 
66.29 


105 
241 


>i'  the  nuiils  (soe  pages  H-in)  ;  (ii)  cn.si  df  furiii.sliiiif,'  n  large  voIiutk 
r  personal  trau.sportation,  not  in  postal  cans,  to  officers  and  representa 


H. 

TEEMINAL    SERVICES    ON    LIGHT    ROUTES    SHOULD    BE 

PAID  FOR.. 

Two  or  three  generations  ago,  when  mail  transportation  was  prin- 
cipally by  stages,  and  railways  were  in  their  early  infancy,  it  was  not 
considered  an  hardship  that,  where  the  stage  terminal  was  within  eighty 
rods  of  a  post-office,  the  stage  should  be  asked  to  make  a  sufficient  extra 
journey  or  detour  to  take  up  and  deliver  the  mail  pouches  at  the  post- 
office.  It  is  a  curious  consequence  of  the  feeble  beginnings  of  the  railway 
industry  that  when  the  mails  began  to  be  carried  over  tracks  of  iron,  in 
vehicles  which  could  not  deviate  from  their  rights  of  way,  this  require- 
ment was  extended  and  the  railway  required  to  receive  and  deliver  mails 
at  all  post-offices  located  within  eighty  rods  of  any  station.  And  it  is 
•  irresistible  proof  of  the  persistent  force  with  which  the  Post-Office  De- 
partment has  continually  imposed  its  will  upon  the  railways  that  the 
practice  still  continues  although  in  many  instances,  on  the  lighter  routes, 
the  cost  of  performing  this  service  exceeds  the  entire  mail  pay  for  the 
route.  This  abuse  is  most  frequent  on  those  railways  which  are  the  least 
adequately  paid  and  it  would  be  but  reasonable  to  ask  that  they  either 
be  relieved  of  this  burden  or  that  tlic  compensation  of  the  lighter  routes 
be  readjusted  on  a  basis  enough  liigher  than  that  now  in  force  to 
eliminate  these  heavy  losses. 

V. 

CONCLUSION. 

This  report  of  the  Committee  on  Railway  ]\Iail  Pay  has  discussed, 
as  fully  as  a  proper  regard  for  the  time  of  its  members  and  the  extraor- 
dinary importance  of  the  subject  warrant,  the  conditions  under  which 
(he  railways  serve  as  auxiliaries  to  the  postal  service  and  their  compen- 
sation for  the  indispensable  services  and  facilities  which  they  render. 

It  has  been  shown  that  the  recommendations  of  the  Postmaster- 
General  contained  in  Document  No.  105,  are  not  founded  in  justice  or 
based  upon  accurate  statements  of  fact  or  sound  transportation  princi- 
ples. 

It  lias  been  shown  llial,  in  Hie  course  of  Ihe  investigation  reported 
in  that  Document,  the  Postmaster-General  collected  illuminative  data 
which  he  finally  withheld  from  Congress  as  to  (a)  cost  to  the  rail- 
ways of  supplying  extraordinary  station  services  and  terminal  facilities 
for  (lie  mails  (see  pages  9-1 H)  ;  (b)  cost  of  furnishing  a  large  volume 
of  personal  transportation,  not  in  postal  cars,  to  officers  and  representa- 

85 


tives  of  the  Post  Office  Department  (see  pages  16-18)  ;  and  (c)  relative 
returns  from  passenger,  express  and  mail  traffic  (see  pages  18-19). 

It  has  been  shown  that  the  most  fundamental  data  as  to  train  space 
occupied,  respectively,  by  the  mails  and  by  passengers,  accurately  re- 
ported by  the  railways,  were  arbitrarily  changed  and  modified  for  the 
report  so  as  greatly  to  diminish  the  former  and  to  augment  the  latter 
and  that  these  changes  operated  so  as  to  diminish  the  estimated  cost  of 
the  mail  service  (see  pages  19-33). 

Further,  it  has  been  shown  that  tlic  data  used  as  the  basis  of  Docu- 
ment 'No.  105,  relating  to  the  single  month  of  November,  represent  a 
month  in  which  passenger  expenses  are  actually  far  below  the  average 
or  normal  level  and  are  abnormally  low  as  compared  with  freight  ex- 
penses (see  pages  43-50). 

And,  still  further,  it  has  been  shown  that  railway  mail  pay  has  ' 
been  reduced  fully  twenty  per  cent  within  the  period  of  about  ten  years 
which  began  with  the  declaration  of  the  Joint  Commission  to  Investi- 
gate, the  Postal  Service  that  it  was  not  excessive  while  during  the  same 
period  substantially  all  the  expenses  of  rendering  these  postal  services 
have  greatly  increased  i^vv  unit  of  sudi  services  (see  pages  50-77)  and, 

Finally,  that  railway  mail  pay  is  plainly  and  demonstrably  inade- 
quate at  the  present  time  (see  pages  77-81). 

And  reasonable  measures  for  providing  more  adequate  and  reason- 
able compensation  have  been  pointed  out  (see  pages  82-85). 

As  a  final  word,  the  Committee  on  Eailway  Mail  Pay  urges  that, 
in  justice  to  the  great  interests  which  it  represents,  in  justice  to  mil- 
lions of  railway  emjiloyees  whose  arduous  and  responsible  services  are 
not  over-paid,  in  justice  to  hundreds  of  thousands  of  depositors  in  sav- 
ings banks  and  owners  of  policies  of  insurance  and  frugal  investors 
everywhere,  in  justice  to  millions  of  workers  in  thousands  of  industrial 
enterprises  whose  prosperity  depends  upon  services  which  only  solvent 
railways  can  suitably  render,  that,  if  any  doubt  remains,  as  to  the  pro- 
priety of  the  relief  herein  recommended,  an  effort  be  made  to  have  the 
voluminous  data  in  ilie  possession  of  tbo  Postmaster-General  laid 
before  Congress,  io  the  end  that  the  facts  herein  set  forth  may  be  fully 
substantiated.  When  those  data  are  completely,  accurately  and  fully 
tabulated,  with  such  other  facts  as  may  be  necessary  to  illuminate  and 
explain  them,  no  scintilla  of  doubt  as  to  tlie  urgent  necessity  of  sub- 
stantial relief  can  remain. 

All  of  which  is  respectfully  submitted. 

86 


APPENDIX    A 


Grosa  Receipts 


Atlantic  Coast  Line 

Baltimore  &  Ohio 

Boston  &  Maine 

Central    of    Georgia 

Chesapeake  &  Ohio 

Chicago  &  Northwestern 

Chicago,   Burlington  &  Quincy 

Chicago,  Indianapolis  &  Louisville 

Chicago,  Milwaukee  &  St.  Paul 

Chicago,  Rock  Island  &  Pacific 

Chicago,  St.  Paul.  Minneapolis  &  Omaha . . . 
Cleveland,  Cincinnati,  Chicago  &  St.  Louis. 

Colorado  &  Southern 

Delaware,  Lackawanna  &  Western 

Denver  &  Rio  Grande 

Erie  

Great  Northern  

Illinois  Central   (4) 

International  &  Great  Northern 

Lake  Shore  &  Michigan  Southern 

Lehigh   Valle.v    

Louisville   &   Nashville 

Maine  Central    

illchigan   Central    

Minneapolis.  St.  Paul  &  Sault  Ste.  Marie 

.Missouri   Pacific    

Nashville,  Chattanooga  &  St,  Louis 

New  York  Central 

New  York.  New  Haven  &  Hartford 

Norfolk   &  Western 

Northern  Pacific   

Oregon  Railroad  &  Navigation  Company 

Oregon    Short    Line 

Pennsylvania  Company   

Pennsylvania    Railroad    

Pere  Marquette 

Philadelphia  &  Reading 

Philadelphia.   Baltimore  &  Washitigton 

Pittsburgh.  Cincinnati.  Chicago  &  St.  Louis, . 

St  Louis,  Iron  Mountain  &  Southern 

Seaboard  Air  Line 

Southern  Pacific   

Texas  &  Pacific 

Union  Pacific   

Vaudalia     

Wabash    


$2,740,291..S5 
7.351,675.33 
3,748,625.98 
1.117,426,72 
2.f-.r.7.437.7S 
i;..'Hll.C81.6e 
7.9.-,-.>.241..38 

.".11:1.224.10 
...a.^i;.7.'-i2.24 
.^.4(;7.7i)4.47 
1,427.236.73 
2,584,603.85 

901.747.65 
:'..232.699.29 
2.1t7.nS.'i.e7 
4.240.370.51 
i;.l".,'i.404.96 
6.247,758.24 

875.607.60 
4.092,945.97 
v,302,219.Sl 
4.540,696.51 

7.''>5. 177.2s 
2.526. 762.iin 
l,580,790.:i4 
2,238,270.37 

989,554.23 
8,441,637.63 
5,161,870.(1.". 
2,990,.353.41 
6.e90,435.5tl 
1.311.040  0:1 
i.'.iOi;.m.s.4s 

4.742.400. '^ 

I4.i.'.7.r..".i  7.; 


Pfissen^r  train  aervicea 


Paeaengerl 


1,: 


ni: 


'.  l.s 


]..'.oi.::5o.i's 
:'..40ii.473.i;:; 

2.420. 7t  18.41 
1.734.707.44 

s,:-;8n.4;!i;.iin 

l,.".illl.6S':.Tl 


1,'. 


i::..81Ki..M 

:l..".oii(;j 
21I,40S,11 


$550,023,99 

1,079,864,92 

1,121,090,39 

277,236.97 

,384,030.56 

1.523,824,64 

1,812.338.67 

113,865.33 

1,048,180.63 

1,494,280.72 

370.688,40 

567,050.30 

115,711.29 

539,948.011 

437,027.75 

693.459.23 

1,151,914.24 

1,212.311.83 

172,982.51 

770,.37,5.68 

30S..S!  18.77 

857.273..->(l 

221.213.44 

.''.1S..316.10 

29.-.,44ii.75 

.•a;4,7s4.oi 

20i,ti:;.:j.; 

2.2011.  'n.ij 

3.0-'1.7si;.'.i-2 

3IH. CI  14.26 

1.58;  1.0: 12. 60 

•■'.2  1.427.17 

40l',7.".S.23 

r.<;4,o.-.2.::t; 

2..".:;i.r,:i4..so 
2-ss.4s:-.i6 
."..•■.S.400.9.-1 
.".8i;.(;os.i2 
.56!.  176.40 
400,755,54 
344.239.211 

2.407.Glll.i;i 
319.801.22 
909.113.67 
164.2.",3.ll.-. 
549.735.21 


Total 


S170,042.91."..51    I    .1:35.267.247.22 


Mail' 


$50,769,95 
08.015.98 
36,768.08 
19.497.36 
30.094.49 

126.284.69 

104.737.01 
16,110.47 

141.4.39.42 

111.982.68 
22.873.66 
60,719.79 
6,791.03 
16,719.82 
25.481.90 
30.037.32 

121.514.98 
90.932.45 
18.231.82 

177.198.22 
16.205.74 
71.802.43 
1. "1.489.  in 
30.230.48 
39.098.04 
63.118.37 
21. .342.35 

212,003.25 
53,180,&4 
28,262,38 
86,916.81 
24,351,14 
34,206,47 
84,043.34 

203,120.54 
20.437.61 
11,797.06 
30.239.04 
08.434.79 
56,778.25 
39.098,03 

161,861.70 
26.430.05 

172.638.78 
43.209,69 
(I4.666..52 

$3.10!),160.32 


.187,504.17 

184.180.00 

140,496.42 

27.244.50 

53.865.92 

262.996.08 

238,022.84 

10.904.67 

183.781.08 

175.205.50 

44,979.17 

88.140.92 

16.620.26 

131.71B.33 

36.698.67 

179.844.17 

101.592.75 

)86.19e.a3 

15.037.92 

185.091.25 

47.757.17 

136..531.92 

20,679.17 

128,968,26 

47,202.17 

49,353.58 

26.312.08    I 

418,342.84    '• 

289.537.75    ( 

43.845.33 

167.051.17 

27.617.67 

38,7(i0.92 

149,686.50 

461,307.67    I 

40,487.08    j 

80,793.25    I 

104,672.75    I 

131.669,334. 

.53.781.67 

61.304.42 

220,627.92 

35.815..5.S 

11.3.865.75    , 

24.468.50 

77.316.25 

$5.343.2,82.13 


Total 


Operatine  expenaea  and  taxea 


Percentaae  of  groaa  receipts 

required  to  pay  operating 

expenses  and  t^xes 


Taxes. 


Total 


.$688,288.11 

1,362,050.90 

1.298.354.89 

323.978.83 

467.990.97 

1,912.10.5.41 

2.245.098.52 

146.870.47 

1.373.401.13 

1.781.474.90 

438,541.13 

716.911.10 

1.39,122.57 

688,384,24 

499.208.32 

909,340.72 

1,375,021.97 

1.489.441.11 

206.852.25 

1.132.665.15 

.372.861.68 

1.01!5.007.85 

257.381.71 

677,614.83 

381,747.86 

477,255,96 

251, ,397,66 

2,830,665.21 

2.397..5II5.51 

373,711,97 

1  ,,833,060.58 

381,295.98 

475.730.li2 

797,782.20 

.3,196,129.01 

349,407.86 

631,057.86 

720.819.91 

799.2S0.62 

520.316.46 

444.641.65 

2.7!lli.100.23 

.3S2.046.a5 

1.195,018.20 

2,31,931.84 

691.717.98 


$43,719,689.07 


$1,553,292,95 
4,907,585.00 
2.542,320.45 

694,767,56 
1..57,"i,411..37 
4.526.768.73 
5.452.830.37 

311,043.57 
3,871,300.09 
3.9.36,332.18 

836,298.76 
1.753,029.97 

.546,992,11 
1,605,176,09 
1,429.691.51 
2.545.297.61 
2.975,.897.19 
4.1S.S.56.5.17 

i;4li.305,90 
2,457,043.72 
1.8:16.042.20 
2.702,231.44 

490.263.17 
1.604,688.83 

692.877.67 
1.679.671.99 

702.540.14 
5.6.38.422.85 
3.218.818.37 
1.696.813.58 
3.,S01.081.14 

739.321.15 

756.796.80 
2,,S41,021,49 
8.6.S2.285.27 

944.300.28 
2.349.536.05 
l,n63,510.,37 
2.125,005.14 
1.377.773.78 
1,1(>7..362.5I 
4.3112.017.01 

9119,314.66 
2.186,436.63 

606,633.06 
1 ,61)3.0.34.28 


$104,217,987.56 


$95,600.00 

190.399.28 

181.926.79 

66,200.00 

07,500.110 

228,000,00 

215,587.31 

20,600.00 

206,636,73 

222,117.85 

53.007.84 

74.000.00 

21.025.00 

151.600.00 

71,000.00 

108.929.81 

318.650.07 

246,647.53 

22,000.00 

125.000.00 

94,600.00 

125,446,00 

39,141.09 

94,000.00 

80,683.30 

80,401.00 

20,600,00 

434,692,01 

.3.30,000,00 

.84,000.00 

254,237.00 

92,190.15 

50,000.00 

150.280.00 

197..526.1S 

73.3,S5.,S0 

35.771.59 
10.5.1117.00 

69.S6I1.III. 

.".9.4I,S.OO 
24tl.Otl2.ll2 


1:1.9." 


142.1 
24.(t.8ti.0o 
64.494.!I2 

.$5,742,735.17 


»S 


$1,648,792.95 
5,097.984.88 
2.724,247.24 

749,957,56 
1,642,911.37 
4,754,768.73 
5.668,417.68 

331,643.67 
4,077,996.82 
4,167,450.03 

889,306.60 
1 .827.029,97 

.56.8.617.11 
1.756.775.09 
1,500.691.51 
2.(154,227.42 
3,294„547.26 
4,435,112,70 

662,306.90 
2,582.(H3.72 
1,930,642,20 
2,827,670.44 

529,394.26 
1.698,888,83 

773,560.87 
1.760.072.99 

723.040.14 
0.073.014.86 
3.648,818,37 
1,780,813.58 
4,065,318.14 

831,511.30 

800.796.80 
2,991.901.49 
S.S79.S11.45 

991.672.66 
2.422.920.86 
1.O'.l9.2,S].90 
2,230.022.14 
1.447.6.39.78 
1.106.780.61 
4..  102.079.63 
1.047.076.51 
2.32.8.1:10.1:1 

030.719.06 
1.757.529.20 


Passen^r  train 


$695,343.33 
991.910.96 
940.606.71 
261,590.01 
287,179.32 

1,004,881.83 

1,042,878.81 
108,704.63 

1.242,168.59 

1,200,583.25 
296,222.44 
633.656.41 
132.726.23 
609,139.82 
410.708.08 
867,693.82 

1.049.938.69 
9I>8,704.31 
199,448.19 
684,667.20 
334,421.46 
698,416.17 
179,082,12 
483,429.79 
385,204.67 
466,361.46 
202,173,22 

2,096,398.21 

1.599,439.,S5 
283,374.25 

1.327,401.96 
313,078.49 
300,295.16 
613,350.60 

2,056,327.76 
207,734.17 
692,222.10 
460.729.03 
525,545.13 
386.702.58 
360.049,21 

2.032,:.20..ii: 
2511.21 1. 2s 
829.380.47 
144.261.49 
470.(:8o.69 


60.04 
69.34 
72.71 
67.11 
61.82 
72.19 
71.28 
66.11 
68.46 
76.04 
62.31 
70.69 
03.06 
54.35 
70.89 
02.69 
53.70 
70.99 
75.63 
63.10 
68.47 
62.27 
70.10 
07.23 
48.66 
78.64 
73.07 
71.94 
6S.75 
59.55 
60.61 
63.42 
42.31 
63.00 
62  72 
71  .,31 
61.28 
73.22 
66.46 
59.80 
67.26 
54.88 
65.46 
46.63 
75.58 
69.48 


$109,980,722.73    |    $32,300,818.99 


64,67 


and   No.   IS. 

car  receipts  and  inisoelbim' 


(1)  As  reported  by  the  Interstate  Commerce  Coinmissioti  in  Bulletin  of  Revptittcs  and  Kx[ipnses  of  Sfeiim  Roads  No.  10 

(2)  .\s  stated  by   the   Postmaster-General   in   Document   No.   105. 

(3)  One-twelfth   of  the  total   receipts  from   expre.ss,  excess  baggage,  milk  carried  on  passenger  trains,  parl.n-  and  chtiir 
I;  terstate  Commerce  Commission, 

(4)  Including,  also,  Indianapolis  Southern  and  Yazoo  &  Misslssipi.l   \'iill.'y, 

EXPLANATION. 

This  table  contains  data  for  forty-six  railways,  being  all  that  appear  in  Pi.BtmasterGenerars  'I'able  7  (Document  106,  pp.  272-281)  for  whi.li  tlial  tabic  st.ites  ..peratiiig  expenses  and  taxes  chiirgeal.le  ti. 
during  November,  1909.  of  $10,000.00  or  more,  with  the  excepti.in  of  the  Granil  Trunk  .'System,  for  which  comparable  data  are  not  reported  by  the  IiifiMstate  Commer.-e  Coiiiniission,  and  the  Atchison,  Topeka  &  Santa  Fe,  for 
which  the  figures  used  by  the  Postmaster-General  are  those  ..f  the  month  of  January.  1910.  It  represents  $3,109,160.32  out  of  $3,607,773.13'  of  mail  revenue  included  in  that  table  or  86.18  per  .-ent.  Its  purpose  Is  to  show- 
that  even  using  the  extremely  low  and  erroneous  estimates  of  .iperating  exiienses  and  taxes  chargeable  to  the  mail  service  made  by  the  Postmaster-General,  the  disparity  between  the  ratio  of  these  expenses  to  revenues,  for 
the  passenger  services  is  so  great  as  to  leave  no  room  for  the  belief  that  (with  any  reasonable  allowance  for  a  return  to  Investors  upon  the  fair  value  of  the  property  used  in  the  service  of  the  public)  the  passenger  train 
services  as  an  whole  are  adequately  remunerative. 

Of  the  forty-six  railways  included,  two  show  a  ratio  of  operating  expenses  and  taxes  apportioned  to  the  passenger  train  services  by  the  Postmaster-General  of  over  one  hundred  per  cent,  five  over  ninety  per  cent,  ten 
river  eighty  per  cent,  twelve  i>ver  neventy  per  ci.|it.  .sixiceii  over  sixty  per  cent   and  inily  one  under  the  latter  percentage.     Tbi>  ratio   for  all  'the   railways  in  the  table  is  73.,8S  per  cent. 


'ceipts  dnriiiL'  the  fiscal  year  1910  as  rc[i'.i'ted  by  the 


the   mails, 


DEMCO 

PAMPHLET  BINDER 

^«"    Pressboord 


UNIVERSITY  OF  ILUNpi9.URBAJ|JA 


1655 


3  0112  04591 


